When assisting our clients with their estate planning, issues surrounding what to do with superannuation entitlements can often be an important ingredient in the overall planning process.
Preparing a Binding Death Benefit Nomination, or expecting that your spouse will receive Superannuation Death Benefits when you die, can be a routine part of most estate planning but can come with unexpected complications due to recent changes in the law around the Superannuation Transfer Balance Rules.
In short, since the beginning of the 2017/18 financial year a cap of $1.6m has been placed on the total amount that can be transferred into what would have previously been a tax free superannuation pension account.
Given the level of amounts that are often held in superannuation (these days) it is quite possible for this new transfer balance cap to be exceeded.
The consequence of exceeding the transfer balance cap can be that any amount in excess of the cap will fall outside superannuation so that the benefits of those amounts being held in that form are lost. There can also be a situation where those excess funds no longer form part of superannuation so that it can no longer be transferred or nominated to be transferred to an estate or individuals.
Because of these changes, it is vitally important that, where there is any prospect of the new transfer balance cap being exceeded, appropriate legal and financial advice is obtained and alternative solutions explored so that the outcome of your estate planning can be properly assessed.
Any review along these lines is consistent with general recommendations that a client’s entire estate plan should be reviewed regularly. The changes to the cap, that are only relatively new, have attracted particular attention and present issues of genuine concern for those that may be caught by the rules.
In summary, it is important to get advice on all aspects of your estate plan and not assume that those plans will be an exercise in “set and forget”. If you have not reviewed your Will and overall estate plan for a while, now would be a very good time to consider making an appointment.
For more information or to discuss, please phone Kennedy Spanner Lawyers on (07) 4639 2944.