Tuesday, February 18, 2014

Estate planning 101 with superannuation entitlements

Last week, I was again reminded of the very strange way in which the superannuation laws currently operate concerning death benefits, and more particularly, the distinction between someone withdrawing their superannuation on the day before death as opposed to it being paid out as a death benefit.

All other things being equal, it is often very likely to be the case that a withdrawal immediately before death will be completely free of tax, whereas the same funds distributed as a death benefit can be liable for tax of up to 30% (plus Medicare).

Obviously, there are a range of competing issues that need to be considered as part of any superannuation and estate planning exercise, however we are certainly seeing an increasing number of people more seriously consider the total amount they wish to retain in super in their later years.

Until next week.

Image credit: 401(K) 2013 via Flickr