Planning for the unexpected in your SMSF

Planning for the unexpected in your SMSF

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Advanced SMSF strategies self managed super Tim Mackay

When you have a Self Managed Super Fund, you need to plan for the unexpected. Do you have a plan for relationship breakdown, incapacity or an untimely death?

The Australian Tax Office shares a series of great videos that help you better understand how Self Managed Super Funds work. Below we share with you their video titled “Planning for the unexpected” and a transcript below.

Transcript of ATO video

Source: AUSTRALIAN TAXATION OFFICE | ATO.GOV.AU
‘SMSF planning for the unexpected (relationship breakdown, incapacity, death)’ VIDEO TRANSCRIPT
The last thing you think of when starting a Self Managed Super Fund is what will happen at the end! But you really should plan for the future when setting up your fund including if a relationship breaks down or if a member becomes incapacitated or dies.

There are a few things to consider when making your plans.

You need to have a plan for what will happen to the fund if a member leaves. It may mean adding a new SMSF member, changing the type of fund or winding up the fund.

Payments from your SMSF must meet the rules in the SMSF trust deed so make sure it covers situations like incapacity, terminal illness or death of a member.

Payments must also meet tax and super laws. In some cases, you may have to withhold tax before paying a super benefit.

You need to consider the insurance needs of members when you set up your investment strategy.

You should consider making a binding death benefit nomination if you want to say who will get your super benefits when you die. An SMSF adviser or estate planner can help you get this right.

It’s also a good idea to consider what will happen if you become incapable of looking after yourself and your affairs.

You may want to appoint an enduring power of attorney who can act as trustee of your SMSF if it’s ever needed.

If relationships in an SMSF break down, you must be prepared to sort out any issues that arise. You can’t force another member to leave or stay in the SMSF or exclude them from the decision-making process.

It pays to make sure your plans are set from the start so that you are prepared for the unexpected. An SMSF professional will be able to help you make these important plans.

For more SMSF information take a look at our other videos – or visit the ATO website at www.ato.gov.au

About The Independent Financial Advisor

My name is Tim Mackay and I am The Independent Financial Advisor. I advise pre-retirees and retirees on how to manage their family's wealth and to fund their dream retirement.

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