Estate Planning

Will key when paying super benefits into estate

Paying superannuation death benefits into an estate provides flexibility from the limitations of super law, but it is vital for the will to cater to this scenario, a lawyer has warned.

DBA Lawyers senior associate William Fettes told the Class Connect 2018 conference in Sydney last week the will not only needs to accommodate the intention to pay the legal personal representative, but also consider what happens if super death benefits are paid into the estate to cover all contingencies.

“You never know what happens. You see disputes over death benefits all the time,” Fettes said.

“We want to make sure if it does pay into the estate, we don’t have some very unequal outcome in terms of what the member may have wished if that happened and you might consider hotchpotch-type equalisation clauses to make sure there is equality there.”

Clients also need to consider tax efficiency drivers in this scenario in terms of death benefit dependants being tax dependants who are perhaps benefiting or expect to benefit from the capital proceeds, he said.

“It’s a holistic process. Don’t ignore the will even if you’re intending everything to go to the one spouse in an income stream,” he said.

“It’s not prudent to not consider what happens for super to be paid to the estate.”

He added paying into the estate provides freedom from the limitations of the Superannuation Industry (Supervision) (SIS) Act in terms of who are the ultimate beneficiaries of the death benefit.

“We’re not stuck with SIS dependants. We can pay to a neighbour, a friend, siblings, a charity. Obviously the tax consequences of that are different, but [there is] certainly more flexibility,” he said.

“Plus we have a much better designed regime in terms of wills and estates law and testamentary trusts from putting restrictions in place in terms of access to the capital.”

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