Your SMSF and Estate Planning – What to consider

You can integrate your self-managed superannuation fund (SMSF) in to your estate plan, providing you the ability to distribute your retirement savings to your beneficiaries upon your death. It is important to remember to have a valid and current Will to enable you to include specific instructions about your SMSF, as personal superannuation is not generally an automatic inclusion in an Australian Will. 

When estate planning with a SMSF, it is important to address Members, Trustees and the Fund itself.   

Factors for Members to consider are: 

• A Binding Death Benefit Nomination (BDBN), a directive given by a member to the SMSF trustee to pay a member’s superannuation benefit to specified beneficiaries upon a member’s death. A binding nomination legally obliges the trustee to follow a member’s instruction, whereas a non-binding nomination gives the trustee discretion in distribution. 

• A Reversionary Pension which allows a member’s superannuation income stream to continue to be paid to a nominated beneficiary (usually a spouse), providing ongoing financial support, upon a member’s death.  

• Taxation, in terms of what form death benefits from the SMSF will be paid to beneficiaries, either taxable or tax-free, depending on the relationship of each beneficiary to a member. 

• Corporate trustees and to whom a member will leave the shares. 

Questions for Trustees to ask are: 

• What are the SMSF’s rules around the instructions for a member’s wishes to be carried out? 

• In what financial position is the SMSF for the carrying out of a member’s wishes?  

• Can death benefits be paid to beneficiaries in required timeframes? 

• Are the SMSF’s investment diversification and liquidity sufficient to pay death benefits? 

Fund compliance issues to address are: 

• The appointment of a new person to act as Trustee in place of any deceased member or to act as Director of a Corporate Trustee.  

• The taxation outcomes generated by the selling of assets, such as Capital Gains Tax (CGT) to be paid upon the sale of property. 

• The distribution of any insurance proceeds for policies held for a deceased member, and whether to claim any tax deductions on unused current year insurance premiums. 

• The continuation of the SMSF upon the death of a member, depending upon the SMSF structure and number of members, as well as whether its trust deed continues to support estate planning objectives made prior to a member’s death. 

Undertaking regular reviews and updates and seeking professional legal, taxation and financial advice are part of ensuring a SMSF estate plan is comprehensive, tax-effective and legally sound.  

How can YML help? 

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF estate plan. For more information, view, our website and contact us on (02) 8383 4444 r by using our Contact Us page on our website.

Restructure Relief Options – Small Business Restructure Rollover

Australia’s Small Business Restructure Rollover (SBRR) is a concession available to small businesses, providing immediate taxation relief via the deferral of capital gains tax (CGT) on active assets being transferred as part of a genuine business restructure. The SBRR provides several benefits to small businesses, assisting them to adapt, grow, and optimise their business operations. 

What is an active asset? 

An active asset is defined as a tangible (or intangible) asset currently used (or connected), or held ready for use, while carrying on a business.  

What are the eligibility criteria for the SBRR? 

• An eligible small business entity with an aggregated turnover of less than $10 million 

• From 1 July 2016, active CGT assets and other active assets were transferred between another small business entity, a small business affiliate or small business partnership 

• A genuine restructure of an ongoing business to improve a business, not an artificial or inappropriately tax-driven scheme, occurred for the transfer of active assets 

• There was no change in ultimate economic ownership of the transferred active assets 

What are the key benefits of the SBRR? 

• Immediate CGT taxation relief – without the financial burden of upfront CGT payments upon transferring active assets during a restructure, businesses can reallocate financial resources to business operations during and after restructuring 

• Improved cash flow management – by deferring CGT, businesses can reinvest savings to help manage their day-to-day, and to develop their longer-term business goals 

• Flexible restructuring – the SBRR applies to various entities (individuals, partnerships, companies, trusts), providing a choice of suitable restructuring, and it applies to various active assets used in businesses for a broad range of purposes 

• Business value preservation – the SBRR can help preserve the value of businesses and thus help maintain business and financial continuity during restructuring 

• Reliable taxation planning – the SBRR provides for the tax treatment of restructured assets to remain certain, so businesses can confidently prepare their financial and strategic plans 

• Business growth opportunity – by deferring CGT of active assets under the SBRR, businesses are encouraged to invest in new business opportunities, research and development 

The Small Business Restructure Rollover is a valuable tool for Australia’s small businesses, offering significant deferred tax relief, restructuring flexibility, and greater opportunity for business growth and innovation. 

How can YML help? 

Talk to our YML Chartered Accountants and YML Finance Teams today to see how YML Group can assist you with the SBRR for your small business. For more information, view, our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

What happens if I don’t have a Will?

A Will is a legal document that sets out how you want your assets to be distributed after your death. You can make specific bequests to individuals or organisations. You can ensure that personal items and special assets go to your choice of people and causes.  

What happens if I don’t have a Will? 

If a person dies without a valid Will, they die intestate, which means that the distribution of their estate is governed by the intestacy rules set out in the Succession Act 2006. If so, it could be that your wishes might not align with the way your estate will be distributed under the intestacy rules. The rules determine the order of priority among surviving family members, rather than following the distribution you would have outlined had you created a Will. 

Not having a valid Will in NSW can lead to several other significant risks and complications for your estate and your loved ones. Some of the key risks of dying intestate are: 

• Potential disputes among beneficiaries, leading to tension and strain in family relationships 

• Higher legal and administrative costs due to the need for court intervention 

• Depletion of estate due to costs, leaving less for beneficiaries, including those who might rely on your estate for living expenses 

What constitutes a Will? 

A valid Will must: 

• Be in writing; handwritten or printed 

• Be made voluntarily, without coercion or undue influence 

• Signed by the Testator, the person making the Will 

• Signed by two witnesses in the presence of the Testator 

• Be created by a Testator of sound mind and having a clear understanding of the purpose and content of their Will 

A Will allows you to appoint an executor, the person who will be responsible for administering your estate by carrying out the instructions in your Will. 

You will likely want to ensure that your minor children are looked after by someone you trust in the event of your death. You can include guardianship instructions for any minor children in a Will by nominating a guardian. 

A Will can be updated by creating a separate document (a codicil) or by making a new Will. It is worthwhile reviewing your Will regularly over the years to ensure it remains relevant to your wishes and to your beneficiaries. 

As your life circumstances change over time or you change your mind about the content of your Will, a Will can be revoked by destroying the old Will with the intention of revoking it, or by marriage or divorce, and then creating a new Will. 

A Will can be contested on various grounds, such as unequal or unfair distribution, or lack of provision for dependents or certain individuals; lack of capacity of the Testator; coercion or undue influence; fraud and/or forgery. 

You can minimise family disputes over your Will by setting out clear instructions that avoid ambiguity regarding asset distribution and by meeting legal requirements of a Will for a smoother administration of your estate. 

Probate is the legal process of validating a Will and your executor will apply to the Supreme Court of NSW for a grant of probate, authorising them to distribute your estate according to your Will. 

Do I need help to create a Will? 

It is worthwhile seeking legal assistance when drafting or updating a Will to ensure it complies with all legal requirements and accurately reflects your wishes. It can give you peace of mind to know that you have a legally binding document for your loved ones, reducing the risk of complications during the probate process. 

How can YML help?

Talk to YML Legal today to see how YML Group can assist you with the creation and management of your Will. For more information, view, our website and contact us on (02) 8383 4499 or by using our Contact Us page on our website.