SMSFs provide 'control' over estate planning

SMSFs have estate planning advantages over retail or industry funds as they “provide certainty” around asset distribution, according to fund manager Clime Asset Management.

Clime Asset Management chief investment officer John Abernethy said that many trustees establish funds to increase control of their assets, including the way assets are distributed when they die.

“SMSFs have advantages over larger funds in this respect, in that they may be able to more quickly distribute death benefits once a trustee is deceased, and they are also not relying on a large superannuation fund’s trustee board to decide how those assets are distributed,” Mr Abernethy said.

While there are many tools available, Mr Abernethy said that one of the most important things a trustee can use when drawing up an estate plan is a binding death nomination.

He said a non-lapsing binding death nomination with a detailed estate plan can provide certainty to SMSF trustees that their wishes are followed.

“A non-binding nomination may not necessarily hold up if contested – it merely acts as a guide for descendants – but a binding death nomination is the strongest instrument available to ensure your wishes are met,” Mr Abernethy said.

“An SMSF binding death nomination can be prepared to suit an SMSF member’s personal circumstances.”

Mr Abernethy also suggests SMSF trustees write a testamentary trust into their wills which allows death benefits to be paid into an estate and then fall into the trust.

Since they are held by the trustees in the name of the beneficiary they can often provide tax benefits, he said.

“Many of us may believe that our estate planning needs are straightforward, but it is important to get the structure legally correct to ensure that the benefits are left to our descendants in the most tax-effective manner possible,” Mr Abernethy added.

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