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Avoiding SMSF death benefit disputes

Recent family disputes over superannuation death benefits carry an important warning to current SMSF trustees.

The disputes have highlighted the need for trustees to have appropriate and binding death-benefit directions planned while members are still alive, in order to reduce the risk of a dispute arising. When there are clear death-benefit directions, surviving trustees have no choice but to comply with them.

Small business owners who use a self-managed super fund can be particularly vulnerable to these types of disputes, especially those involved in a family business. This is because many small business owners hold their family business premises in their family self-managed fund, and any dispute over death benefits can lead to the forced sale of the small business premise.

To avoid the possibility of disputes arising over superannuation death-benefits in a small businesses, owners should nominate a successor trustee or successor director. This can help assure the right ownership and control of their assets is passed on to their intended superannuation beneficiaries.

Owners should also openly discuss with their family what they intend to do with their super death benefits. Establishing strong personal relationships within the family is one of the best ways to avoid a family dispute in the future.

Posted on 15 July '15 by , under Super.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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