The value of Self Managed Super Funds as an effective estate planning tool is sometimes overlooked, or not properly considered when people are establishing Self Managed Superannuation Funds.
Noel Whittaker wrote a very insightful article in The Sunday Mail on 20 February 2011 highlighting some of the complexities and pitfalls in setting up a Self Managed Superannuation Fund.
Consistent with Noel’s train of thought, a self managed superannuation fund should not be set up purely as an estate planning tool. However, through a Binding Death Nomination, superannuation can assist in achieving your estate planning goals. A properly constructed Binding Death Nomination will ensure that the superannuation entitlements of a deceased person pass directly to the person nominated in that Binding Death Nomination, and do not form part of the estate. Assets that form part of the estate are vulnerable to claims being made against the estate by creditors and disgruntled beneficiaries. Bypassing the asset pool of the estate effectively quarantines the superannuation entitlements of that deceased person.
Whittaker emphasises the importance of obtaining advice before a self managed superannuation fund is established. Similarly, professional advice should be obtained before a Binding Death Nomination is entered into, so that a full understanding is obtained.
If you have any questions regarding Self Managed Super Funds (SMSF) and estate planning, please don’t hesitate to contact me.