Super and Death

[Mr. Fabulous]

So even when one engages and pays a professional for specific advice on a specialised legal or tax topic, the individual has no way of knowing that the advice or course of action is correct.

The individual gets screwed twice .... once when they engage the professional and secondly from the grave when his beneficiaries have to sort out the problem and probably think he stuffed up.

This is what I dislike about the legal and accounting systems we have in this country. It is so complex and nothing is black and white. So much so that 3 legal minds can have 3 different viewpoints on the same point of law.

Not really. It is up to the individual to determine whether the specialist they are handing over all their legal and accounting work to is in fact, capable of performing said duties.

If people are prepared to just go with 'whoever', without really understanding who they are giving the job to, then they need to shoulder at least a good portion of the blame for any negative outcome.

Not to mention that most people expect champagne service on a beer budget. They want the best, but they aren't prepared to pay for it. There is also the factor of human error. No matter how good someone is at their job, there is no way on earth they are going to be 100% perfect.

 

[Terry_w]

Hi Terry, DBA just posted this today, thought you might be interested.

http://www.dbalawyers.com.au/smsf-s...ortant-implications-smsf-succession-planning/

Wow, excellent article and very interesting case.

Everyone with a super balance should read it
http://www.dbalawyers.com.au/smsf-s...ortant-implications-smsf-succession-planning/

 

[CHAOS]

Terry are you saying that even if I have nominated hubby as beneficiary of my super (industry fund) thay he may not get it?

 

[Rolf Latham]

Not really. It is up to the individual to determine whether the specialist they are handing over all their legal and accounting work to is in fact, capable of performing said duties.

If people are prepared to just go with 'whoever', without really understanding who they are giving the job to, then they need to shoulder at least a good portion of the blame for any negative outcome.

Not to mention that most people expect champagne service on a beer budget. They want the best, but they aren't prepared to pay for it. There is also the factor of human error. No matter how good someone is at their job, there is no way on earth they are going to be 100% perfect.

I like it

pretty good synopsis

ta
rolf

 

[D.T.]

Terry are you saying that even if I have nominated hubby as beneficiary of my super (industry fund) thay he may not get it?

From what I understand, having first hand experience with this recently, there's a difference between "nominated beneficiary" and "binding nomination ". The former can be overridden by a will that states otherwise.

It's a minefield though, definitely seek advice.

 

[Hoffy]

From what I understand, having first hand experience with this recently, there's a difference between "nominated beneficiary" and "binding nomination ". The former can be overridden by a will that states otherwise.

It's a minefield though, definitely seek advice.

No it can't be overridden by the will as it doesn't form part of the estate. The trustees will be guided by the nomination of beneficiary but are not bound by it. The Binding Nom removes this issue.

 

[Terry_w]

Terry are you saying that even if I have nominated hubby as beneficiary of my super (industry fund) thay he may not get it?

It depends...
Does the fund allow BDBNs, does they lapse? Has your's lapsed?

Firstly you will have to check that the nomination is binding. If it is not expressed as such then the trustee doesn't have to follow it. You must direct the trustee and not say "it is my wish..." or "i hope the trustee pays my benefits to x"

Then you have to check the formalities. Is it properly witnessed, is it dated, does it need to be delivered to the trustee etc. Failure here means it is invalid.

And then you have to consider is it a good idea to give it to your husband diirectly, or would it be better to give it via the will. i.e. leave it to the estate and then in your will direct it to him. There can be differences in terms of asset protection and estate planning.

 

[CHAOS]

From memory when joining you just write in the name and percentage of who you want your super to go to on your death. Nothing had to be witnessed.

 

[Terry_w]

From memory when joining you just write in the name and percentage of who you want your super to go to on your death. Nothing had to be witnessed.

In that case it is just a suggestion to the trustee. Not binding.

 

[Alex Straker]

Well done for raising this issue Terry, it is very important. I would estimate 50% of the clients I see for the first time don't have this properly sorted out.

A non-lapsing binding death benefit nomination is the way to go as this does not have to be re-written every 3 years. Second best is the binding death benefit nomination. As Terry says make sure you follow the requirements for witnessing and paperwork.

Ensure that advice is taken that the trust deed under which the fund operates contains provisions allowing members to make Binding Death Nominations or Non-lapsing Binding Nominations.
? Ensure that the nominations, as drafted, properly and fully reflect your wishes. In this regard, you should seek professional advice prior to making a Binding Death Nomination or Non-lapsing Binding Nomination.
? A Binding Death Nomination or Non-lapsing Binding Nomination is similar in legal effect to your will and must be considered carefully in the same way. As with a binding will, you must ensure that a Binding Death Nomination or Non-lapsing Binding Nomination is made in the presence of two independent witnesses. Both witnesses must be watching you as you sign and must also watch each other sign, however you are not required to show them the rest of the Nomination (although you may do so, if you wish).

Witnesses:
? Must be over the age of 18 years and not be under any legal disability (ie. they must be of sound mind); and
? Must not be potential beneficiaries under the Nomination.
? A Binding Death Nomination will last for three (3) years, unless it is confirmed, modified or revoked within that time.
? A Non-lapsing Binding Nomination will not lapse unless it is modified or revoked.
? The trustee of the fund must inform you of the existence and terms of each Nomination each year and, ideally, you should confirm it each year.

 

[CHAOS]

Thank you Terry for bringing this to our attention.

Interestingly my Super fund said they only offer the 3 year binding nomination. If this lapses then it refers to your 'preferred' beneficiary.

I did ask if I could have a non-lapsing one, she checked, and no they don't offer that.

 

[Terry_w]

Thank you Terry for bringing this to our attention.

Interestingly my Super fund said they only offer the 3 year binding nomination. If this lapses then it refers to your 'preferred' beneficiary.

I did ask if I could have a non-lapsing one, she checked, and no they don't offer that.

In that case put a reminder in google calender so you can get a prompt in year 3,

Also consider putting a special clause in an enduring Power of Attorney to allow you attorney to renew the BDBN if you had capacity issues down the track.

 

[Mr. Fabulous]

Interestingly my Super fund said they only offer the 3 year binding nomination. If this lapses then it refers to your 'preferred' beneficiary.

CHAOS, this is pretty standard for the majority of public offer funds, however a growing number of retail funds are offering non-lapsing nominations.

Personally, if I was you, I would ensure that you stay on top of your Binding Death Benefit Nomination every 3 years and not rely on your super fund telling you they default to whatever.

 

[CHAOS]

Also consider putting a special clause in an enduring Power of Attorney to allow you attorney to renew the BDBN if you had capacity issues down the track.

Funny you say that because when speaking with the consultant I asked if I became incapacitated could the person who has my power of attorney renew it? ....she didn't know

 

[CHAOS]

Not really. It is up to the individual to determine whether the specialist they are handing over all their legal and accounting work to is in fact, capable of performing said duties.
An individual should be able to trust their legal representative, accountant, broker, doctor. If these specialists can rescind all responsibility by blaming the individual for choosing them, then society is in a bad place.

If people are prepared to just go with 'whoever', without really understanding who they are giving the job to, then they need to shoulder at least a good portion of the blame for any negative outcome.
People also get burnt by reputable people. If you question someone's professionalism that is taken as a lack of trust. The only thing left is for individuals to qualify themselves so they can do everything, then they can take full responsibility.

Not to mention that most people expect champagne service on a beer budget. They want the best, but they aren't prepared to pay for it. There is also the factor of human error. No matter how good someone is at their job, there is no way on earth they are going to be 100% perfect.

A bit like expecting to buy a property for well under market value? Where did people get that sort of mindset from? Paying a lot doesn't always correlate to great service. There is a difference between human error and sub standard professionalism. Most individuals can make a clear distinction between the two.

 

[Paul@PFI]

So even when one engages and pays a professional for specific advice on a specialised legal or tax topic, the individual has no way of knowing that the advice or course of action is correct.

The individual gets screwed twice .... once when they engage the professional and secondly from the grave when his beneficiaries have to sort out the problem and probably think he stuffed up.

This is what I dislike about the legal and accounting systems we have in this country. It is so complex and nothing is black and white. So much so that 3 legal minds can have 3 different viewpoints on the same point of law.

Joe - Not true. Get three advisers in room and you will get more than 3 views. I'm always in two minds if something will work.

Our tax laws arent different from most countries. No law is black & white except Racial Discrimination Act (that was a dad joke)

I maintain good advice shouldnt ever tell you what to do. It should advise the options you so you can make an informed choice that diminishes your risk. I often will propose an alternate that involves risk. I explain the concerns and what impact may arise. Recent example was a client fighting ATO. They had blown $1.5m so far getting what I consider was bad advice from others. I pulled them aside during settlement and plainly explained my belief they were being screwed. And ATO would likely either win or send then bankrupt in process. They would only win by settling now at a cost. So they met my recommended solicitor who handles heavy tax cases. Settled in two weeks. Yes it cost them but did they expect to "win" and walk away? Their biggest risk was continuing to fight. They chose peace.

 

[Paul@PFI]

The biggest concern I have is those who ask funds for binding / non-binding death is that usually they do so to avoid the cost of a will. If their will was correct what is the concern ? Yes - a will doesnt address super. But it can if ou ensure thats were death beenfits end up !!! If the decison is made to go from fund to estate to beneficiaries then the will is paramount. And if the estate is going to receive death beenfits then a will is a bloody good idea. The Public Trustee isnt a very good death benefit option.

A BDN or NBDN is totally useless for many people aged over 60...They choose a reversionary pension and dont later review the reversionary beneficiary. eg : their now deceased spouse. So Trustee chooses the estate.

Have seen plenty of death noms that refer to their adult kids etc...But their super includes components which kids will be taxed on.

 

[Terry_w]

A bit like expecting to buy a property for well under market value? Where did people get that sort of mindset from? Paying a lot doesn't always correlate to great service. There is a difference between human error and sub standard professionalism. Most individuals can make a clear distinction between the two.

There is trust and then there is abiity. The solicitor who messed up a will with the directions to the SMSF trustee on death may have been honest, but he didnt know what he was doing. He was negligent in the preparation of that will. If the client died then the solicitor could be sued by the benenficiaries who missed out.

Most lawyers think wills are easy. You just get a template and put in the names. But these are the dangerous types of wills. I paid $20k and took 2 years to do a masters degree in wills and estates. If it was that easy such a course couldn't be run.

 

[alexlee]

I think if you increased requirements for solicitors so that all solicitors were fully up to speed with super and high level tax planning, you would 1) have far fewer solicitors, and 2) the remaining ones would charge a lot more.

 

[The Fence]

And who is responsible for making all this such a very hard task to understand with many opinions and no certain outcomes........The lawyers themselves.

Great way to keep in a job.