Tuesday, June 6, 2017

Estate planning and the 2017 super reforms – the six post death strategies you must be aware of

View Blog Estate planning and the 2017 super reforms – the six post death strategies you must be aware of by Matthew Burgess

Last week’s post considered 11 of the key strategies that need to be taken into account from an estate planning perspective in light of the 2017 superannuation changes (see - Estate planning and the 2017 super reforms – the 11 things you must be aware of).

Each of the issues flagged were primarily focused on pre-death estate planning strategies.

There are however a number of post-death issues in light of the 2017 superannuation changes that should be considered from an estate planning perspective, namely:
  1. Death benefit pensions can now be rolled over to a new fund (under the previous rules, this was very difficult). 
  2. Reversionary beneficiaries will now have up to 12 months from the death of the member to determine whether or not they wish to cash a benefit before it is credited to their entitlements and if the amount will result in the beneficiary exceeding their $1.6 million transfer balance cap, the excess amount must be paid as a lump sum benefit. 
  3. Where there is no reversionary pension, the pre-existing requirement that benefits be paid ‘as soon as practicable’ remains in place. Whether this phrase can be read in the context of the new amendments to mean (say) within 12 months remains open to debate. Next week’s post will consider in more detail the appropriate interpretation of this phrase. 
  4. Where no specific strategies have been implemented and a member passes away, it may be possible to establish a post-death superannuation proceeds trust. Generally, a post-death superannuation proceeds trust can allow infant beneficiaries to gain access to adult tax rates on income received. 
  5. This said, there are a number of technical requirements that must be met and the range of circumstances where the structure is available and appropriate is relatively narrow and should generally be seen as an alternative of last resort (previous posts have explained the various issues in this regard further, see - Why superannuation proceeds trusts should only be an avenue of last resort and Superannuation proceeds trusts: Tricks and traps). 
  6. When dealing with an SMSF, control of the fund continues to be critical and prior to implementing any of the approaches above, steps should be taken to ensure the SMSF is compliant with the SIS Act and trust deed (in particular, by ensuring any required changes to the trustees or directors of the corporate trustee are processed within the required timeframes). 
The above post is based on the article we recently had published in the Weekly Tax Bulletin.

Finally, many of the themes in this post were featured in our recent Estate Planning Roadshow.

Download the brochure to purchase a full recording of the event here - https://viewlegal.com.au/product/recorded-webinar-package/

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