SMSF succession planning is much more than estate planning – here’s why

Succession planning and estate planning. In financial and legal circles, you may hear the terms often thrown around, and even used interchangeably by some people, unaware of the significant differences. So, while both can play an important part in helping detail your future financial arrangements, its vital to understand how each can assist in giving you, and your loved ones, peace of mind.

This insight helps explain the differences between the two, and provides more specific details about the role succession planning has in superannuation.

As you age, planning for the management of your self managed super fund (SMSF) and the effective distribution of your estate can be a very personal, sensitive and complex issue. And many of us (understandably) don’t like to talk about it. But as it’s an incredibly important area to manage properly, we’d like to offer a number of suggestions to help tie it all together.

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Succession planning is so much more than preparing a will, but doesn’t always have to be complicated

Practically speaking, SMSF succession planning involves ensuring that your SMSF is well managed as you age, and that your death benefits are tax-effectively passed on to your loved ones. But emotionally, there are several additional considerations to think about and align with your personal affairs and estate plan. And it is a conversation best had sooner rather than later. Some careful planning today can help ensure your wishes are fulfilled tomorrow. In developing a succession plan, here are some of the key points to keep in mind.

  1. Document the important legal things
    It’s important to be prepared for any critical event that may impact your SMSF, such as illness, mental incapacitation and death. To ensure your SMSF continues to operate effectively and that your benefits are passed on as you intended, consider drafting powers of attorney documents as well as binding death nominations for your super, wills and perhaps testamentary trusts. A good estate planning lawyer can help you correctly document all these things, as well as assisting with other requirements which can minimise disputes between beneficiaries and help ensure all your assets, including non-estate assets such as super, form part of your overarching estate plan.
  2. Don’t forget about tax!
    Keep in mind that there may be a considerable tax liability for your family when your death benefit is passed on. However, there may be strategies available to minimise these tax liabilities, so make sure you get some good advice now to maximise the benefits to your loved ones later on.
  3. Think about your trustee structure
    Did you know that if you and your partner are trustees of your SMSF and one of you passes away, it can be a big job to restructure your SMSF? And do you really want your partner to have that responsibility at that time? A corporate trustee structure is an alternative that can help relieve this burden and we can talk you through how it could work in your personal situation.
  4. Find the right support now for peace of mind
    Are you the person in your relationship who manages the paperwork and investing for your SMSF? Is your partner much less interested? We often find that the less-involved spouse can find this role daunting and stressful, especially knowing that if you fall ill or pass away that much more responsibility will come their way. You can remove some of this stress now by finding a firm that provides an extra layer of support – it doesn’t mean you lose control of your SMSF, it just means that there are people who know you, understand you, and will be there in times of need.

How to structure a Succession plan for your SMSF?

Partnering with a supported SMSF service like Dixon Advisory can link all the elements for an effective and personal succession plan. A good plan now can help provide some certainty and support, and it’s more practical and less emotional to consider strategies now, rather than waiting until you really need to. From testamentary trusts and powers of attorney to estate tax planning and asset protection, you are still in the driver’s seat to get the best advice and ensure your wishes can support you and your loved ones as you age.

Your detailed succession plan can then become a vital element of your broader estate planning arrangements. 


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David Calvert

Managing Director, Family Wealth Management

David Calvert delivers his significant expertise in self managed super funds (SMSFs), retirement and investment strategies to Dixon Advisory’s clients as Managing Director, Family Wealth Management.

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