Lawyer points to persistent estate planning issues
Several SMSF estate planning issues arise repeatedly, including documentation errors, often resulting in a significant cost to SMSF clients or death benefits not reaching their intended recipient.
Speaking at a Chartered Accountants Australia and New Zealand event, Cooper Grace Ward partner Scott Hay-Bartlem said drafting errors in trust deeds are one of the common problems he sees in relation to SMSF estate planning.
“There are some super fund trust deeds that because of drafting errors mean a member can make a binding nomination but a pensioner can’t or the pension rules we give the discretion back to the trustee, because the death provision is inconsistent with the pension provision – this does happen,” said Mr Hay-Bartlem.
He also cautioned SMSF practitioners on ‘hardwiring’ a trust deed since lawyers may attempt to have parts of the trust deed amended for their client.
“So if I’m hardwiring a deed, I also need to amend the amendment provision,” he said.
“I’ve seen a few deeds that have tried to stop people doing things they wanted to do, but don’t stop me amending and don’t stop me rolling [out funds].”
SMSF practitioners should also avoid doing a wholesale deed replacement if the client has particular provisions within their trust deed, he said.
“What will happen? You’ll lose them,” he said.
Mr Hay-Bartlem added that SMSF practitioners should ensure that any reversionary pensions are valid by examining the deed or the pension documents.
It is important practitioners are aware of where these reversionary documents are located.
“It can be frustrating, I know, because you can have a pension that can go 25 years but in 25 years’ time when the pensioner dies, [you’ll] want those pension documents,” he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.