Separate SMSFs underutilised in estate planning
The use of separate super funds as an estate planning strategy is rarely considered by SMSF practitioners despite the fact that it can be the most appropriate strategy for certain clients, says an industry lawyer.
Cooper Grace Ward’s leader of commercial work group, Scott Hay-Bartlem, says cases such as Wooster and Morris demonstrate that for certain clients, simply splitting the members into their own SMSFs may be the best approach.
“In the Wooster and Morris case, Mr Morris ignored the binding death nomination and ripped the money out for herself,” Mr Hay-Bartlem told the SMSF Association technical day last week.
While Mr Morris’ daughters managed to have the binding nomination upheld in court in order to get the money back, Mrs Morris died before the final judgment was handed down and had spent most of the money already.
The situation would not have happened if there had been two separate super funds, Mr Hay-Bartlem said.
“I had a client couple in a second marriage and they just wanted to make some tweaks to their existing wills and they were a bit hazy in the meeting about the details of it. I found out later that actually neither of them knew what was in the other’s will, but they were in the same SMSF together,” he said.
Mr Hay-Bartlem said in these types of scenarios, having two separate funds is usually the better option.
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 also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.