LightYear Docs launches specialist SMSF will
Superannuation document provider LightYear Docs has launched a specialist will for SMSF trustees, which aims to circumvent problems with legal challenges and mismatches between the regulations governing traditional wills and those governing the payout of SMSF death benefits.
LightYear Docs founder Grant Abbott said the new will template had been created in response to the rising incidence of legal challenges around estates involving SMSFs, which he said presented a unique set of issues that advisers and trustees often overlooked.
“I have spent a lot of time, thousands of hours looking at the ups and downs of SMSF estate planning and more importantly witnessed, in the last few weeks alone, stuff-ups by lawyers and their clients in terms of SMSF estate planning which have cost more than $100,000 in legal fees to resolve,” Mr Abbott said.
“For the family who has lost a loved one, this is an unmitigated disaster and makes me angry when with a little planning, safety, certainty and security, could be achieved.”
Mr Abbott said the frequent use of binding death benefit nominations (BDBNs), or reliance on an SMSF member’s will to adequately direct the distribution of their super assets after death, could often result in the member’s wishes not being adhered to or family disputes ending up in the courts.
He noted that ATO and state Supreme Court legal precedences had shown the BDBN rules in section 59(1A) of the SIS Act did not apply to SMSFs, and that the ATO had also stated the governing rules of an SMSF deed took precedence over a member’s will when it came to how death benefits were paid out.
“In working with LightYear Docs, my safe, certain and secure solution is the SMSF will — a set of binding directions in a similar form to a will that directs the trustee on what to do on the death of a member,” Mr Abbott said.
“It is secure because it has the force of section 55 of the SIS Act such that failure of a trustee to act in accordance with the SMSF will opens up the trustee and their advisers, including any lawyer, to a claim for damages or losses under section 55(3).”
He added that the SMSF will would allow the appointment of a replacement trustee to act on behalf of the deceased member’s SMSF estate, the making of specific bequests of assets of the fund to dependants and the creation of income streams for a spouse.
In addition, trustees and their advisers could create a death benefits trust coming from the SMSF, appoint a professional to manage the SMSF estate and arrange immediate transfer of death benefits without the need to wait for probate.