PROTECT YOUR SUPER ASSETS
Andrew and Helen had 4 children. Between them, Andrew and Helen had $1.5 million in a SMSF. Three months ago, their eldest son, Michael, asked his parents if he could join their SMSF. Their Advisor told them that to comply with Superannuation legislation, Michael had to become a Trustee of the SMSF if he was to become a Member.
Last month, Andrew and Helen went on a car trip around Australia. While crossing the Blue Mountains, they were involved in a head-on collision, and were both killed.
Michael was nominated as the Executor of Andrew’s and Helen’s Will. Andrew and Helen had nominated all their four children as beneficiaries to receive the proceeds of their super upon their death.
The sole surviving Trustee of the SMSF, Michael was not communicating with his brothers and sisters, and had developed a taste for the high life.
Without a Binding Nomination, a Trustee has absolute discretion in distributing death benefits from the Super Fund. Michael had a free reign over who got Mum and Dad’s Super, and how much of it. He exercised his discretion as the Trustee and the Executor of his parent’s Wills to pay out the $1.5 million to himself. He brought himself a new red Ferrari and drove off into the sunset, while his parents turned in their graves and his siblings were left dumbfounded and helpless to stop him.
Under Superannuation law, the Trustee of your Super Fund has the discretion and obligation to use this power. At this stage you might say to yourself: this does not apply to me – I have nominated my beneficiaries.
Are your bases covered? You certainly thought so. Are you the next Andrew and Helen?
You can over rule the Trustee’s discretion, and truly have you final say about who receives your death benefit. You can ensure that your Super is paid, as you want, after your death. This new Super feature is called Binding Death Benefit Nominations (Binding Nominations). This document allows you to incorporate the option of making a Binding Nomination into your SMSF deed.
For further information, contact any of the offices of Macarthur’s.