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Estate Planning

Control key to estate planning

Estate planning

Trustees should consider who will be in control of their SMSF decisions when a member dies, and ensure their estate planning reflects this.

Trustees need to ensure they have clarity regarding who will be in control of their SMSF in the event of a member’s death, an SMSF service provider has said.

In a blog post on its website, SMSF administrator SuperGuardian highlighted control as a key estate planning consideration for trustees wanting to avoid legal disputes over their fund in the future.

“Who is left holding the purse strings cannot be overstated as being one of, if not the most important elements of SMSF estate planning,” SuperGuardian said.

“Control is often stated as the primary reason for having an SMSF. Yet at the time when an individual needs it the most, they often haven’t implemented appropriate contingencies to execute it.”

The service provider stated having the proper documentation in place was one way trustees could avoid confusion when a member of the fund either lost capacity or died and there was a need to turn to other parties to make decisions on behalf of the fund.

Essential documentation, such as a written-for-purpose trust deed, a last will and testament, an enduring power of attorney and a nomination of beneficiaries, if consistent, would provide clarity for trustees during difficult times, it added.

“Each document in isolation may only provide part of the solution, but what is certain is that at the core of all estate planning disputes is the documentation,” it said.

“The biggest mistake is assuming that everyone will do the right thing.”

The SMSF administrator also pointed out members should not assume their legal personal representative (LPR) would automatically take over should the member die or lose capacity.

“It can happen and some deeds will mandate it, but up until now it has been the exception rather than the rule,” it noted.

“As it stands, the law provides the ability to appoint the LPR in place of the member, but it doesn’t require it.”

Last month, CBA Commonwealth Private Office strategic advice specialist Caroline Harley said financial advisers should give greater consideration to language and not just figures when providing items such as estate planning strategies for their SMSF clients.

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