Plan 2 Prosper

Chances are you’ve seen lots of TV and newspaper advertisments over the last few years (well at least since Fund Choice and Fund Portability legislations were enacted) tempting you to change super funds. But before you decide to switch providers, make sure you consider some key estate planning features.

Binding Nominations

Some Super funds allow you to nominate – with certainty – who you’d like to receive your super in the event of your death. By completing what is known as a ‘Binding Nomination’ you can elect your super to be paid to your estate or certain beneficiaries who are considered dependants for superannuation purposes. These include your spouse, children of any age, a financial dependant and an ‘independant’ person. ‘Binding Nominations’ need to be renewed every three years.

Without a valid binding nomination, the fund trustee generally has the final say when determining who should receive your benefit. If a fund doesn’t offer this feature or if you haven’t taken up the opportunity (read this bit carefully its important) your super may not be distributed according to your wishes.

S279D Payments

 In the event of your death, some super funds will pay a larger lump sum benefit to certain eligible dependents. This additional benefit – which is known as a s279D payment (or ‘anti-detriment’ payment) – is broadly designed to refund the contributions tax of up to 15% deducted from your taxable superannuation contributions.

Depending on your circumstances, a s279D payment can amount ot thousands of dollars, which could make a significant difference to the funds available to your dependants to pay off debts and meet their ongoing living expenses.

Income Streams

While a superannuation death benefit can generally be paid to your dependants as a lump sum, not all funds offer your beneficiaries the option of using the money to commence a tax effective income stream.

For example, if you leave behind a young family, it may be more beneficial if your children under the age of 18 receive some of your super as an income stream.

Everyone’s circumstances and needs are different. This reinforces the needs for flexibility in options and choices, at what would naturally be a difficult time for the surviving family members.

Review whats important to you and seek advice

If you want to review your super and the options available to you contact our office to make an appointment.

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Disclosure / Disclaimer:

Dan Smith and Plan 2 Prosper are authorised representatives of GWM Adviser Services Ltd ABN 96 002 071 749 trading as MLC financial Planning, Australian Financial Services Licensee (AFSL:230692). The articles being accessed may contain general information and general securities advice. Before making any investment decision on the basis of the articles, you should consider, with or without advice, the contents of the articles in light of your particular investment needs, objectives and financial circumstances.

This entry was posted on Thursday, February 28th, 2008 at 5:04 pm and is filed under Superannuation. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.