Estate plan­ning and super­an­nu­a­tion — How to have the last laugh

In brief

Super­an­nu­a­tion is a fun­ny thing. It is yours, but you can’t have it yet. It gets paid out when you die, but the mon­ey may not go to whom you would like. You are basi­cal­ly sav­ing all your life for some­thing you might nev­er receive and you prob­a­bly don’t even know who is get­ting it when you die. Black humour? You will only be laugh­ing if you have the right advice. Angela Har­vey, part­ner, and Euge Pow­er, solic­i­tor, give some insight on how to have the last laugh when it comes to leav­ing your super­an­nu­a­tion to the peo­ple who need it most.

Imag­ine this: You have tens of thou­sands, hun­dreds of thou­sands or even a mil­lion dol­lars or more, and you can’t do what you want with it. You might hold in your hands the oppor­tu­ni­ty to make the lives of the ones you love much more com­fort­able. Arm your­self with the below infor­ma­tion to make sure you leave your super­an­nu­a­tion in the right hands:

1. I thought: where there is a Will there is a way? 

Although it would seem to make sense to most peo­ple, you can­not sim­ply dis­pose of your super­an­nu­a­tion by stat­ing who it is to go to in your Will. Arrang­ing who is to ben­e­fit from your super­an­nu­a­tion can be a com­plex and ongo­ing issue if you do not have an expert work­ing with you.

2. Stiff as a board (Psst! I’m talk­ing about the super­an­nu­a­tion trustee…)

A trustee of a super­an­nu­a­tion fund can be inflex­i­ble and rigid as they must abide by all the var­i­ous pieces of leg­is­la­tion when it comes to who will receive the ben­e­fits after death of a mem­ber of a fund. The trustee has lim­it­ed dis­cre­tion to change to whom a death ben­e­fit is to be pro­vid­ed.

3. Death and tax­es: togeth­er at last (but not in the way we hoped)

Pay­ments of death ben­e­fits from super­an­nu­a­tion funds can have lots of dif­fer­ent tax con­se­quences, depend­ing on:

  1. Is the ben­e­fit being paid to a dependant?
  2. Had the super­an­nu­a­tion reached matu­ri­ty? (i.e. has the mem­ber retired?)
  3. In which way must the ben­e­fit to be paid accord­ing to the legislation?
  4. Do any assets in the fund need to be sold or trans­ferred to affect the payment?

All com­pli­cat­ing fac­tors in rela­tion to how much tax is paid. An expert in this area can assist you to pay as lit­tle tax as pos­si­ble depend­ing on con­tin­gency plans for when and who pay­ments are to be made.

4. Dom­i­na­tion of your nom­i­na­tion to remove expec­ta­tion of deprivation

If your plan is to have your super­an­nu­a­tion dis­trib­uted direct from the trustee of the super­an­nu­a­tion fund, there are ways in which you can nom­i­nate a par­tic­u­lar per­son to receive the funds. A non-bind­ing death ben­e­fit nom­i­na­tion gives some guid­ance to the trustee on who to give your hard earned.

A bind­ing death ben­e­fit nom­i­na­tion does what it says. How­ev­er, the paper­work must jump through a num­ber of hoops to be effec­tive, and even still, the nom­i­na­tion will only last for 3 years unless it is renewed.

5. The com­plete last laugh pack­age: pay­ment into your estate

This takes the super­an­nu­a­tion trustee out of the pic­ture entire­ly. Pay­ment to your estate means it is the words in your Will which will set out who gets what and when. Tax­a­tion issues can be worked out dur­ing your life­time or dur­ing the admin­is­tra­tion, whichev­er is nec­es­sary and depend­ing on how much pow­er you give to your executor.

The prob­lem with the seri­ous, com­plex and the seri­ous­ly com­plex things in life, like death and super­an­nu­a­tion, is that peo­ple don’t want to talk about them, and will tend to leave them until it is too late. These issues are seri­ous, and they are com­plex, but no one is say­ing you should do it on your own. Expert solic­i­tors who have knowl­edge and expe­ri­ence can assist you with the seri­ous­ness, so you can get on with the fun in life. Do this and you can be assured you will have the last laugh know­ing you have tak­en care of those who need it most.