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Self-managed Super Fund’s (SMSF) have the following advantage from an Estate Planing perspective:

  1. Control

No one can challenge who gets what in a SMSF Last Will & Testament. It is a privilege given to the rich that can afford to have a SMSF. This is unlike a “normal” Will, which can be easily & automatically challenged by family members (with much relish). The people that can legally challenge, in all states, include your parents, children & spouse (including de-factos & gay partners). This is why Wills are uncertain documents when compared to s SMSF Last Will & Testament.

  1. Certainty

Currently, no one can challenge a Binding Nomination. However, the laws may change for Binding Nominations. Binding Nominations only last 3 years. If you get Alzheimer’s disease then you can’t update it. This means only a SMSF Last Will & Testament gives 100% certainty of where your super goes when you die.

  1. Longevity

A SMSF continues on for generation after generation. This is provided you continue to have members. It is a wonderful gift to hand to your children.

  1. Keeping money in your Super after you die – Reserve Accounts.

SMSFs can have reserve accounts. These allow money to stay in your superannuation Fund after you die. Otherwise, the money usually have to come out of your super, unless there are reversionary pension & the like. Reserve accounts are automatically available if you have a Brett Davies Lawyers SMSF Deed.

  1. Tax savings.

Thomas Henn from Brett Davis Lawyers did research on tax havens around the world. Australian SMSFs for pensioners were in the top 10. Families can now accumulate large assets and have them passed down from generation to generation (subject to point 4 above).

Being careful

If you are not careful, the other Trustees of the SMSF may well walk away with your Super. For example, if you and your wife die and the only remaining trustee is your oldest daughter then you are leaving it open for your oldest daughter to take everything. Nothing would then go to your other children.

As seen in Katz v Grossman (2005) NSWSC 934 (16th September 2005), the trustees of a SMSF can pretty much do whatever they want as there is not court to oversee their decision. After dad died, the daughter just appointed her husband the trustee. He distributed dad’s entire super to her and none to the brother. Shameful and wicked, but the court could do nothing to stop them.

In comparison, for all non-SMSFs, the Superannuation Complaints Committee dissects what the trustee did, and either confirms or changes the trustee’s decision.

Every financial adviser, accountant and lawyer working in SMSF should send a copy of our Katz v Grossman story to their clients. Rumour has it that the son that received nothing got pretty snaky with his professional advisers – I suppose they settled out of court as there are no records of a court case.

Article prepared by Brett Davies Lawyers

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.


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