Category: Estate Planning

As detailed in part 1 of our Superannuation Estate Planning series, superannuation death benefits can only be paid to a member’s legal personal representative(s) -LPR- and/or their dependants as defined by the Superannuation legislation (SIS). Although these parties may qualify as a superannuation dependant the benefit may be subject to tax. The tax treatment of death benefit payments relies upon whether the beneficiary qualifies as a dependant for tax purposes. The below table summarises both Superannuation (SIS) dependants and tax dependants.

A Binding Financial Agreement (BFA) is a term which includes a variety of different financial arrangements made during a relationship. A BFA is essentially the Australian version of a pre-nuptial agreement, it is an agreement between de facto (inclusive of same-sex unions), soon to be married or already married couples.

This month’s Wealth Pipeline is on Power of Attorneys.  A power of attorney (PoA) is a formal document giving another person the authority to make legally binding decisions on your behalf.  There are two types of power of attorney: general power of attorney and enduring power of attorney.  Broadly, an PoA authorises an attorney to do whatever legally and/or financially the donor of the power can do.

Trust property is held on trust by the trustee for the benefit of the beneficiaries.  This means, the trustee is the legal owner of the trust property.  Beneficiaries are entitled to the benefit of the trust property.  There are many obligations imposed on trustees, including acting in the utmost good faith and avoiding conflict transactions.  Conflict transactions arise where the trustee has personal interests, which do not align with the best interests of the beneficiaries.  Trusts are governed by relevant legislation and the terms of the trust deed.

It is a common misconception that superannuation interests automatically form part of your estate upon your death. This is not necessarily the case. Ultimately, the superannuation fund’s trustee determines where a superannuation death benefit is paid. Depending on the superannuation fund, it may be possible to fetter the trustee’s discretion with a binding death benefit nomination.