Most of us who run SMSFs are optimistic as far as our own capabilities and relationships are concerned and that is why we take control of our own finances and plan for the future of our own family. But life can throw curve balls at us (damn I hate using American euphemisms) and we need to be prepared for many of those factors we cannot control.
Foreseeable but unexpected issues such as a relationship breakdown, incapacity or an untimely death all too often catch us by surprise. for SMSF Trustees these are risks that needs to be managed, planned for and reviewed regularly to ensure our funds can be maintained in the short to medium term allowing for our wealth to go where we want it and tax effectively if possible and without disposing of assets in a fire sale.
The ATO have provided yet another little cracker of an educational video for SMSF trustees on planning for the unexpected (relationship breakdown, incapacity, death).
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.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.
Liam Shorte B.Bus SSA™ AFP
Financial Planner & SMSF Specialist Advisor™
Tel: 02 98941844, Mobile: 0413 936 299
PO Box 6002 BHBC, Baulkham Hills NSW 2153
5/15 Terminus St. Castle Hill NSW 2154
Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572
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