With the transfer balance cap set to commence from 1 July 2017, HLB Mann Judd has identified some estate planning strategies SMSFs may want to consider.
Speaking at a seminar in Sydney, HLB Mann Judd partner Michael Hutton said one of the strategies SMSF practitioners and trustees may want to consider is establishing an automatic reversionary pension, as the credit appears 12 months after the day the pension becomes payable.
“[These pensions] give you an extra window of 12 months to sort out your superannuation death benefit,” Mr Hutton said.
For other clients, he it may be better directing lump sum benefits to go to the estate rather than to specific individuals as this enables the client to incorporate testamentary trusts in the will.
“With testamentary trusts you can create wills that are well structured and that outline how you will leave the money to each of the beneficiaries,” Mr Hutton said.
The other reason for directing it to the estate, he said, is that the tax outcomes may be better if it’s being paid to adult children.
“If it is paid directly to the adult children, rather than to the estate, [they will be] paying 15 per cent tax on part of the benefit that they receive,” Mr Hutton said.
He added that SMSFs have the advantage of control and flexibility in regards to estate planning, enabling them to organise where payments goes and organise it quickly.
“It’s much quicker to deal with compared with a retail or industry fund.”
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