The prevalence of “disasters” with DIY will kits is increasing in SMSFs, with members not understanding the nature of their superannuation and not seeking professional advice.
It is concerning that SMSF members are choosing DIY estate planning options given the complexity of their funds’ structure, wills and estates accredited specialist at Equity Trustees Anna Hacker told SMSF Adviser.
“You’ve got so much money sitting in super, much more concern has to be made about how that can actually be dealt with and how it’s distributed,” Ms Hacker said.
“It always surprises me to see people, who have done everything they can throughout their lives to develop strategies to protect their wealth and minimise their tax liabilities, then decide to save money by using a DIY will kit,” Ms Hacker says.
SMSF members often don’t understand that superannuation isn’t part of their estate, Ms Hacker said, and view it as another asset.
“Super is the thing that almost every client has no understanding of; they think it’s a bank account, they think that they can deal with it however they want.”
Ms Hacker added that while the rate of SMSF establishment is steadily increasing, the number of SMSF members organising their estate planning effectively is not.
“It’s an increasing problem, because people have increasingly complex financial structures, especially those with SMSFs,” she said.
Ms Hacker said that a common reason for wills to be challenged and overturned is that professional advice and assistance wasn’t consulted.
“A will that has been incorrectly written, improperly witnessed or that is ambiguous or out-of-date, can result in lengthy court proceedings... which delay payments and emotionally drain potential beneficiaries who are frustrated that wishes are not being followed,” she said.
“Usually, all of this could have been avoided if proper advice had been obtained and the processes understood.”
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