Tuesday, January 28, 2014

Estate planning costs paid through superannuation

It is well understood that, in order to obtain the concessional taxation available for superannuation savings, a superannuation fund must have its sole purpose as being the provision of benefits to members on retirement, or their dependants or legal personal representative (LPR) on death.

In this context, one issue that is often raised is whether a superannuation fund can pay the costs of ensuring its members have their estate planning affairs in order.

In the absence of any specific guidance from the Tax Office in this area, there are a range of views about the legitimacy of this approach.

Some advisers believe that any estate planning related expense is clearly incurred in order to help provide for the dependants or LPR of a member and therefore properly payable by a superannuation fund.

The conservative position is that either all estate planning costs should be incurred by members personally, or alternatively where they may be paid by the superannuation fund, there must be a direct and clear nexus between the expense incurred and the ultimate provision of benefits to dependants or LPR on the death of a member.

Next week's post will consider some specific examples of the types of costs that may be legitimately incurred by a superannuation fund on behalf of a member.

Until next week.