A significant number of individuals still possess a distinct lack of understanding as to how superannuation assets are to be treated upon the death of a member, an accounting firm partner has revealed.
“I still find that people are surprised that their superannuation doesn’t live beyond them – that their super does have to be paid out essentially upon death albeit with a limited ability to transfer a super balance to a surviving spouse,” HLB Mann Judd Sydney wealth management partner Michael Hutton said during an industry roundtable held today.
“Other than that effectively your super account has to be paid out upon death, it’s not a good intergenerational wealth transfer vehicle.”
Hutton noted the coronavirus has had a noticeable effect on the frequency of these types of discussions with clients.
“One of the main things I’m seeing at the moment is [an increase in conversations] about estate planning,” he acknowledged.
“I guess people are feeling a little bit mortal in the current times [and] not so confident, so we’ve been talking to people about how they structure their affairs [in the event of death].”
According to Hutton, the new laws allowing SMSFs to service six members are yet to come up in estate and succession planning conversations with the firm’s clients and he is not expecting the situation to change any time soon.
“I think that one is a bit of a slow burn, but I think there will be interest. We’ve nominated that to a few clients as a [potential] succession planning [strategy] for them if they want to get their kids involved in the fund as they get older,” he noted.
“So I think the six-person fund is a good idea, but we haven’t seen a tidal wave of interest in them.
“But I think it’s a good thing to have in your back pocket to be able to offer [clients].”
