Speaking to SMSF Adviser, Matthew Bambrick, the ATO's assistant commissioner, SMSF segment, superannuation, pointed to the complexities of sorting out an individual’s superannuation in the event of death or incapacity where the appropriate succession plans are not in place.
“We find that quite a lot of trustees haven’t turned their minds to those sorts of issues. And of course many professions would encourage them to do so, [and we] encourage the profession to encourage their clients to turn their minds to those sorts of things,” Mr Bambrick said.
“In relation to the fund, what do they want to happen when they become incapacitated and when they die? It can be quite messy to sort out for the remaining family if you haven’t planned for those things.”
His comments come as the prevalence of age-related conditions such as dementia, which is the greatest single cause of disability in older Australians, continues to rise.
Without a medical breakthrough, the number of Australians with dementia is expected to reach almost 900,000 by 2050, according to Brian Hor, Townsends Business & Corporate Lawyers’ special counsel for superannuation and estate planning.
“One minute everything is going along solidly, and you think 'I am going to live till 85 and have a wonderful retirement', and then 10 seconds later you have a stroke and everything changes overnight,” he said late last year.
“You have to ignore the ‘likely’ result and instead deal with a ‘possible’ result, which means setting up structures to handle trustee incapacity at the very time the SMSF is set up. That way there are no gaps,” he said.