Succession planning becoming top SMSF query

“The early Baby Boomers are now in the mid-70s and the Baby Boomers are the ones that really pumped a lot of money into superannuation and potentially have large taxable components,” said Mr Ali. 

“[These clients] are getting older and wanting to look at estate planning and succession planning strategies.”

One of the big questions in this area is around the control of the SMSF after they’ve died, he said.

“This isn’t necessarily about trying to control from the grave, but putting in place strategies so that their superannuation money goes to the right person at the right time with the least amount of tax payable,” he explained. 

“The two key questions we get asked are around death benefits and making sure that the surviving spouse or the family members know what to do.”

Mr Ali said SuperConcepts is also receiving a lot of queries around reversionary and non-reversionary pensions. 

“A lot of people back in the day had non-reversionary pensions because it was better tax-wise because there’d be a larger deductible amount if you had the shortest life expectancy. If it was reversionary, the deductible amount would be based on the spouse’s life instead, which meant it was lower,” he said.

This resulted in a lot of pre-1 July 2007 pensions being non-reversionary, he noted.

“[However], we’ve now got the 12-month hiatus before the [pension] is registered as a transfer balance account credit to the surviving spouse,” he said.

“So, we’re getting a lot [of] questions from clients around whether non-reversionary pensions can be made reversionary. That will obviously come down to the trust deed, pension agreement and the fund’s governing rules.”