A superannuation lawyer has stressed the importance of ensuring the proper legislation governs the estate planning within an SMSF to establish the best protection against court challenges regarding death benefits.
“The first part about dealing with an SMSF and estate planning is [to determine] what is the law of the SMSF. Make it the law that you want it to be. Generally speaking the answer to that is the law of the jurisdiction in which [the trustees] live,” Coleman Greig principal lawyer Peter Bobbin told delegates at the Chartered Accountants Australia and New Zealand SMSF Conference 2021 held this week.
Bobbin highlighted the danger of not following this approach using the example of trustees who had previously lived in New South Wales but had moved to Queensland in their retirement years.
“[In this situation if] you’ve updated the trust deed [but] haven’t updated the law of the trust, they’re living and working in and enjoying Queensland but they’ve still got this SMSF that has the law of NSW [applying to it]. How insane is that,” he said.
“That means you’re guaranteeing that superannuation fund is therefore being exposed to one of the broadest deceased estate claim legislations in Australia.”
According to Bobbin, the process of changing the governing jurisdiction of a fund is not difficult, emphasising the degree of negligence involved if advisers do not take this course of action.
“It is [so easy to] amend a trust deed, to do this. Obviously you’ve got to read the amendment power, but it’s got to be pretty bad if the amendment power is not of a nature that you can’t [for example] delete Queensland and insert NSW or vice versa,” he noted.
Doing so will prevent lawyers from “forum shopping” or being able to choose the most advantageous jurisdiction to challenge a deceased estate, thus offering better protection for any death benefits in question, he pointed out.
