Basics about Super – Super and Death Benefits – how does it work? (Super Death Benefit)

Basics about Super – Super and Death Benefits – how does it work? (Super Death Benefit)

Basics about Super – Super and Death Benefits – how does it work? (Super Death Benefit)

The Australian Tax Office (ATO) confirms that super is not part of a person’s estate (usually), and the Trustees who control and run a super fund or Self-Managed Super Fund (SMSF), determine where the money goes.

The ATO site tells us –

Superannuation (super) doesn’t generally form part of a deceased person’s estate unless the trustee of the super fund pays it to the estate under the terms of the trust deed and the super rules.

In most cases, when a person dies their super fund will pay their remaining super to the person they have chosen as their nominated beneficiary. Super paid after a person’s death is called a ‘super death benefit’.

If there are no binding death nominations, the trustee of the super fund will decide how the benefit will be paid depending on the trust deed and super law. If the super fund trustee pays it to the deceased estate, the executor will deal with it as part of the estate.

If you believe you’re the beneficiary of a deceased person’s super or are the executor of a person’s estate, you should contact their super fund to let them know that the person has died, and ask them to release the super. If you don’t know the details of the deceased person’s super, you can Check your super look for their accounts.

The tax treatment of a super death benefit depends on whether the:

  • Person receiving the benefit is a dependant or non-dependant of the deceased person, and
  • Benefits are received as a lump sum or income stream.

If you receive a death benefit as the executor of a deceased estate, the estate pays tax on behalf of the beneficiaries of the super on the same basis as would have applied if the payment was paid directly to the beneficiary, excluding the Medicare levy.

And other links and info on the ATO page are –

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

See our next seminar/webinars above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

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Masterclass SMSF – Why is the trust deed the most important document when a member passes away?

Masterclass SMSF – Why is the trust deed the most important document when a member passes away?

SMSF – Why is the trust deed the most important document when a member passes away?

The SMSF trust deed is the first and most important document when a member passes away as it has the rules and determines how the death benefits are distributed. The trust deed sets out how death benefits are treated, especially if the deceased member had left conflicting instructions, but primarily because super is NOT part of an estate unless directed to go there.

In one complex example, an SMSF member signed a binding death benefit nomination signifying the sole recipient of their death benefit was to be their legal personal representative, that is, their estate, while also having a reversionary pension in place – but what was contained in the trust deed would determine the final outcome. Many deeds say that a binding death benefit nomination takes precedence over a reversionary pension, and others choose to go the other way. If the rules of the trust deed and governing rules of the reversionary pension were set up properly, the binding death benefit nomination would play a secondary role.

However, if the deed could not resolve the issue, court proceedings might arise as a result, so to avoid the heartache and costs for the trustee and the potential beneficiaries in the future, it is recommended that trustees conduct an immediate review with their advisors determine what is allowed, but also if any member had both a reversionary pension and a non-lapsing binding death benefit nomination, and find out if they were consistent, which arrangement might prevail under the trust deed and amend the trust deed if necessary.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

See our next seminar/webinars above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

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MASTERCLASS Investing – Property Investing is more successful when thinking National, not Local

MASTMASTERCLASS Investing – Property Investing is more successful when thinking National, not LocalERCLASS Investing – Earnings per Share (EPS) Analysis – How investors use EPS

Investing – Property Investing is more successful when thinking National, not Local

One of our Business Partners, Property Friends, explains why property investing is more successful when you are thinking National, not local when looking for areas to invest

Regular readers of our newsletter will know of our nationwide search for property that provides you with the highest, safest returns with minimized risk. Peter McRae, a winner of Your Investment Property’s Investor of the Year Award, agrees. He says. “When people look for investment properties in familiar areas, they can focus too much on trivial things at the expense of the real issue, which is whether or not there are growth drivers”.

Don’t be afraid to buy sight unseen: “Most people feel comfortable buying in their local area, but usually only because they are used to living in the area. Comments such as ‘I’ve lived there all my life’ are common, but it is not a reason to purchase there for an investment,” Peter says.

Secondly, he argues that when you see the property, you are also more likely to be affected by emotional decisions that are not relevant. These can include whether you like the kitchen or not. Therefore, seeing the property can actually be counterproductive.

Use a buyer’s agent: The first place to begin is to look for areas that are due to grow soon. He does this either by buying property reports or by speaking to his buyer’s agent.

Buyers agents are invaluable because they tend to know the areas well – from an investing standpoint. They develop good relationships with local agents, and their negotiation skills are exceptional because they do it every day,” he says. This is also what Property Friends does. McRae also believes that buyers’ agents are an especially good option for people who are unfamiliar with buying interstate. “I found that I learnt an enormous amount of information from my buyer’s agent, and it saved me making mistakes.”

Following that, his next step is to make sure the area has good rental returns, preferably above 6%. Once the area has been decided on, then it’s a case of finding the property.

These comments were posted on popular, independent website “Your Investment Property” and it seems as if this award winning investor has been reading our newsletters – as his thoughts are aligned with ours. In summary, he believes investors should:

  • Look nationally
  • Complete thorough research
  • Hire a professional negotiator/buyer’s agent
  • Enjoy increased returns

We also like to add that there are a number of other areas to review before making an investment in property. When evaluating a new development for purchase, we investigate the area’s vacancy rates, clusters of social housing, nearby industrial/commercial developments/infrastructure/schools etc, traffic flow [during peak and off peak times], council and insurance rates plus stamp duty and land tax structures. These factors affect long-term property growth and rental prospects.

That’s why they are carefully considered by Property Friends when researching a new development deal for you. Think of all the time and uncertainty our due diligence will save you. We do all the work including ongoing support to ensure you have a successful Property Investment portfolio. To find out more call Uwe (03) 9758 5331 Melb Australia or www.propertyfriends.com.au.

(As posted on Linked-in Pulse)

Want to know the options and how property works in SMSF?

See our next Seminar with Property Friends.

Or call for free education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need. A call is FREE.

If you have any questions, why not give us a call – it’s FREE!

No obligation. 0407 361 596, Paul.

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NEWS – Withdrawing funds illegally from an SMSF is a top recurring trend

NEWS – Withdrawing funds illegally from an SMSF is a top recurring trend

Withdrawing funds illegally from an SMSF is a top recurring trend

Krystine Lumanta at SMS Magazine reports 

Trustees withdrawing funds illegally from their SMSF was a top recurring trend throughout last year and was expected to continue in 2016, according to an SMSF auditor.  “During 2015, the same issue has cropped up: trustees taking money out of the account, usually for their business because they have cash-flow issues, or trustees inadvertently taking money out of an account because they have multiple bank accounts and they’ve clicked on the wrong one,” SuperAuditors director Shelley Banton told selfmanagedsuper.  “Even if they may have corrected it, was it in a timely manner?  “Also, there needs to be some explanation and information about why that transaction has happened because once the money comes in, it’s quarantined as a contribution and once it goes out, if it doesn’t meet a condition of release, then it is illegal early access.
“We’ve seen people paying for expenses for the fund out of their own pocket several times and then had the fund repay them and if they’re doing that on their credit card, for example, you’d have to question whether they’re getting reward points, et cetera.”
Banton stressed it was up to trustees to use extreme caution as she did not believe stricter regulations would solve the problem. “While you’ve got several accounts with the one financial institution or bank, there’s always a possibility that you’re going to click on the wrong one – that’s just a fact of online life,” she said.
“You can’t get to the point where you mandate trustees to have a separate account entirely which is not linked to any other account online. “I don’t know how that would be regulated and it wouldn’t be something that I’d want to look at come audit time. And it would be more red tape instead of less.”

Read More.

Want to know the options and how property works in SMSF? Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need. A call is FREE.

If you have any questions, why not give us a call – it’s FREE! 

No obligation. 0407 361 596, Paul.

Posted in News & Stats, Retirement Planning, SMSF Info, SMSF Investing, SMSF Property, Superannuation General, Uncategorized | Tagged , , , , | Leave a comment

Basics about Super – Employees can choose – Choice of Super Fund

Basics about Super – Employees can choose - Choice of Super Fund

Basics about Super – Employees can choose – Choice of Super Fund

Employers should be aware that employees who are eligible for super in many cases are also be eligible to choose the fund you pay into. But if they aren’t eligible to choose or don’t make a choice, you must pay their contributions into your employer-nominated or default fund.

The ATO website explains further, as repeated here –

Step 1: Identify employees who are eligible to choose

When you employ new staff, check if they’re eligible to choose a super fund.

Your new employee is eligible to choose their super fund if they are:

  • employed under a federal award
  • employed under a former state award, now known as a notional agreement preserving state award (NAPSA)
  • employed under an award or industrial agreement that does not require super contributions
  • not employed under any state award or industrial agreement (including contractors who are regarded as eligible employees for super purposes).

If you’re not sure what, if any, award or industrial agreement covers your employee:

  • visit the Fair Work website at fairwork.gov.au
  • phone the workplace relations department in your state or territory
  • check with your employer association.

From 1 July 2015:

  • you don’t need to offer choice to employees on temporary working visas. Your employee retains the right to request a standard choice form from you
  • you no longer have to provide a standard choice form to employees whose superannuation fund undergoes a merger or acquisition. Employees retain the right to request a choice form from their employer should they not wish to be placed in the successor fund.

Step 2: Provide a standard choice form

You must provide employees who are eligible to choose a super fund with a Standard choice form (or equivalent) within 28 days of their start date, unless they give you details of their chosen fund first.

You don’t have to use the Standard choice form, but any alternative document must cover all the information that the Standard choice form covers.

Existing eligible employees are entitled to change their choice of fund as often as they want to, but you have to accept a new choice from them only once in any 12-month period. If your employee asks for a choice form you have 28 days to provide it.

You need to keep a copy of the completed Standard choice form for your own records for five years. You don’t have to send a copy to us or to your employee’s chosen super fund.

You also have to give an employee a Standard choice form within 28 days if you:

  • can’t contribute to their chosen fund or it’s no longer a complying fund
  • change your employer-nominated fund and you’re paying the employee’s contributions into that fund.

Step 3: Act on your employee’s choice

Once an employee advises you of their choice of super fund, you have two months to start paying contributions into that fund.

If they don’t choose a fund or haven’t provided the necessary information, you should begin paying super contributions for them into your employer-nominated fund.

You may be penalised if you don’t offer your eligible employees a choice of fund or you don’t pay their super to their chosen fund.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and You top right hand side above.

If you have any questions, why not give us a call – it’s FREE also!

No obligation. 0407 361 596, Paul.

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NEWS – Are offers for “discounted” SMSF advice a worthy substitute for professional financial and investment advice for SMSF Trustees?

NEWS – Are offers for “discounted” SMSF advice a worthy substitute for professional financial and investment advice for SMSF Trustees?

Are offers for “discounted” SMSF advice a worthy substitute for professional financial and investment advice for SMSF Trustees?

There are a growing number of SMSF ‘discounters’ with advertisements offering cheap over-the-phone, online advice for SMSF members and trustees, but this is no substitute for professional financial advice, an industry consultant believes. Such is the opinion of industry consultant John Wiseman from John Wiseman Consulting, who said the motivation behind this trend was SMSF trustees seeking low fees and charges, but warned that while it may appear to be a cost-effective solution, it came with its own dangers. “I can only see an ocean of trouble for those that have elected the cheap offering over professional qualified advice that is provided by specialist financial planners,” Wiseman said.

“There is absolutely no substitute for quality for anyone acting as the trustee for one of the two largest and most important assets of an individual’s life.”

With SMSFs accounting for nearly 30 per cent of the $2 trillion held in assets in superannuation accounts of around 550,000 as at December 2015 as more trustees desire control of their retirement savings/investments, Wiseman said this sheer size demanded professional financial advice as the era of the amateur do-it-yourself SMSF was almost obsolete. Read More…

Reported by Malavika Santhebennur at Money Management

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also!

No obligation. 0407 361 596, Paul.

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CASE STUDY – Chen & Anna – Want more control and someone to help run the administration and compliance

CASE STUDY – Chen & Anna – Want more control and someone to help run the administration and compliance

Chen & Anna – Want more control and someone to help run the administration and compliance

WHERE they were atChen & Anna asked the planner and I what could they do to plan as best they could for retirement – how could they have more control and someone to help run the tedious administration and compliance which they knew they couldn’t do. Their daughter’s had good jobs now and were more settled and Chen wanted to retire by 65 as he was slowing down. On a visit to the doctors, a specialist was advised for Chen after blood tests looked suspicious. Later it was found he had rare leukaemia and diagnosis only suggested a few years to live with this kind. The savvy planner investigated his insurances in one of his commercial super funds and found he had a possible claim. They were keen to start a Self-Managed Super fund after all the responsibilities were explained carefully, and potential benefits the broker and his strong company analysis could bring gave comfort.

What they WANTED to haveThey wanted to have more control over their retirement outcome aim to be self-funded. If they needed money for treatments, it could be available if Chen converted his super to pension. They also wanted to be self-funded as far as possible. If they could go back to Europe and see family soon, that would be a bonus, and Anna would like to go part-time and then retire later in 3-4 years.

What it would COST Talking with the advisor, they estimated an annual income required would be $50,000 in today’s money.

What they would NEEDTo be safe, if a conservative investment return of 5% is used, (one 20th of 100%) this meant they required at least 20 times the income goal – that rounded to approx. $1,000,000 in assets.

What to do NOW Their current super was under $60,000 where the insurance claim was started, 9with a potential pay-out of $160,000) and 3 other funds had combined $80,000, and their daughter had $40,000 and $20,000, to also join in the SMSF. This was short of what was planned, so Chen and Anna would continue to work and save as much as they could in super for the tax advantages when they were in pension phase.

Chen and Anna liked that the SuperBenefit Programme recommended broker supplied a list twice a year after reporting season, of financial data on companies with strong financial health that are likely to perform well.

We were instructed by the planner to set up the SMSF and applied to the super funds to roll-over to the new SMSF bank account. The planner assisted in many doctor and specialist visits and they made application to claim on the insurance for the terminal illness. Then they spoke to the stock broker about the list he had created for SuperBenefit clients, of healthy Aust companies based on the 12 financial health criteria. Since 2010 clients have made returns ranging from 3-18% in certain years.

They also had peace because any queries or compliance issues, could simply be directed to SuperBenefit the administrator, who would CONNECT them to the right advisors as required (SMSF Connector Service)

They now had the components in place –

Strategyto take control of the retirement plan, and build super

Structure an SMSF using SuperBenefit administration,

Support with resources and all compliance taken care of by SuperBenefit, as well as a team of specialist professionals that the SMSF Connector service provides

Chen was able to successfully make a claim and was awarded the $160,000, after many months. His health deteriorated sooner, however, he stopped work earlier, and Anna assisted his care at home, She was then diagnosed with breast cancer and undertook treatment via chemo-therapy. Chen cried as she lost her beautiful hair, and she had to take a few months off work. Then Chen took a turn for the worse, and passed away peacefully. Anna came through successfully and has returned to work part-time.

Note – This is a simplified summary of one client – we recommend asking for a FREE consultation and/or seeking further professional advice with our recommended advisors or your own.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

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