Tuesday, June 9, 2015

Superannuation proceeds trusts

Following last week’s post an issue has been raised as to whether the View wills provide for a Superannuation Proceeds Trust (SPT) -  and the answer is: Yes they do.

A SPT within a will (as opposed to last week’s post that related to a structure established outside a will) is a trust that is set up solely to receive the superannuation benefits of a member following death.

Generally, the beneficiaries of a SPT must be confined to persons who are ‘death benefit dependants’ of the deceased, being a:

a. spouse or former spouse of the deceased;

b. child, aged below 18, of the deceased;

c. person with whom the deceased had an ‘interdependency relationship’; or

d. person financially dependent on the deceased just before they died.

The benefits of having a SPT in a will are:

1. It provides greater asset protection compared to the superannuation death benefits being paid directly to a death benefit dependant - for example, against relationship breakdowns, creditors or spendthrift beneficiaries;

2. Distributions from the SPT will generally be excepted trust income, such that recipients under the age of 18 will be treated as adults;

3. The distribution of the superannuation death benefits to the SPT is taxed in the same way as if they had been paid directly to the death benefit dependant (provided the beneficiaries of the SPT are limited to tax dependants).

 Next week we will look in more detail at how View Legal structures SPTs in wills.

Image credit: Martin Gommel cc