Super balance over $1.6m? You should review your position now

Super balance over $1.6m? You should review your position now

Changes to the rules around superannuation effective 1 July 2017 mean anyone with a substantial super balance should review their estate planning immediately. If they don’t, anyone they pass their super to may face the prospect of tax penalties, and even the possibility of being disinherited. 

How the new regime deals with our super when we die

On 1 July 2017, the final reforms under the new superannuation regime came into effect. These change what’s possible when it comes to passing super to a surviving spouse and could have major tax implications if you have a substantial balance in your SMSF.

  • There is now a limit of $1.6 million to how much you can most tax effectively keep in super;
  • When a member dies, the spouse doesn’t get the benefit of the deceased’s limit, only their own, so the effectiveness of the limit halves;
  • The effect of this limit is compounded by another rule which prevents spouses holding their deceased’s super in accumulation phase for their own benefit. 

What do you need to do?

If you’re affected by these changes, you need to make sure your estate planning around your super considers the new regime. If it doesn’t, your super may be taxed more than it would otherwise be, or may not end up where you want.

You should also ensure that the mechanisms in your SMSF give effect to your intentions.  After all, any death benefit nomination you make won’t be effective unless it is in line with both the superannuation laws and your fund’s trust deed.

For this reason, we recommend that you review:

  • Any nominations or death benefit documentation under your SMSF
  • Any documents affecting pensions under your fund
  • Your fund’s trust deed, especially any requirements it makes for payments and instructions
  • How your fund deals with trustee succession
  • Your will and other structures to make sure they reflect your intentions.

How we can help

Cooper Partners specialises in estate planning for SMSFs. We can review all your estate planning documents, including your trust deed, to analyse any risks and make sure your super goes where you intend. We can also help ensure your wealth stays within the family – and in a tax effective way.

To arrange an estate planning health check, contact Jemma Sanderson on (08) 6311 6903 or jsanderson@cooperpartners.com.au 

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.