In this edition of It depends, partner Scott Hay-Bartlem discusses whether your superannuation death benefit should be paid to your estate, to be dealt with under your Will.
Video Transcript
In this edition of It depends, I'm going to talk about whether my superannuation death benefits should be paid into my estate, to be dealt with under my Will.
Should my superannuation death benefit be paid to my estate, to be dealt with under my Will?
Well, this is the It depends. There are a number of options for superannuation death benefits, going into your estate to be dealt with under your Will is a good option for many people, but not everybody.
When would I want my super to go into my estate?
So, for a lot of people, it's a good place to have their superannuation death benefits paid to their estate to be dealt with under their Will when they die. We have more flexibility as to where it goes. There are limits on to whom you can pay directly out of a superannuation fund to someone through an estate, we can pay wherever we want it to go. If your superannuation death benefit goes into your estate, it's the estate that pays the tax and we usually won't pay the Medicare levy. So, rather than having the individual recipients get the money and having to worry about what effect it has on their benefit thresholds, having it going into the estate can be an effective way of doing it. If it goes into an estate, we can be quite flexible. We can use structures like testamentary trusts to protect the beneficiaries from where the money goes and to give them some structure around how they deal with it. They're three very common reasons, there are, of course, others.
When wouldn't I want my super to go into my estate?
So, there are some situations where the last place you want your superannuation death benefit to go, is into your estate. Now, in most states you can keep the superannuation outside your estate, protect it from an estate challenge. That can be an important reason. Once your superannuation goes into your estate, then we are subject to all those estate challenge kinds of rules. If your superannuation goes into your estate, it can't be paid as a pension. So, where we want, for example, a surviving spouse to receive superannuation as a recurring pension or income stream, we'll have to send it to them outside of the estate. It's also important to think about restrictions. What's the recipient going to do with the money? And we can clear it away from the whole lot of rules and restrictions you might have. It might be quicker to make the payment outside the estate. Again, there's a number of others. So again, where your superannuation goes, the death benefit planning, there's lots of issues to think about, and what's going to be best will vary on people's circumstances.
If you'd like more information about this, please contact a member of our superannuation or estates team. Thanks for watching this edition of It depends.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.
