General Estate Planning issues (Wills, PoA, AHDs)

[QF WP]

Correct @Pushka, you and MrP couldn't be (as I know you) in a Commonwealth Government non-funded superannuation fund (or similar) where the benefits are paid from consolidated revenue (and therefor have yet to be taxed). That's why they have 30% taxed on any lump sum withdrawals (or fully taxable if they are taken as a pension benefit).

Where your son is a resident is not relevant. The first and only question is whether he is a non-dependent, partial dependent or fully dependent. You can answer that one pretty easily

Plus remember the above commentary from the ATO website relates only to the taxable component of your super benefit. The tax free component is already (and will always be) tax free to anybody receiving the benefit.

 

[mrsterryn]

Currently my defined benefit has no "residual" if husband happened to predecease me. My husband still has a couple a years with of "residual" on his if I happen to predecease him. Child will have a property and probable some cash if not all spent. Plus a few other assets

He had already received a significant portion of his pre inheritance about 6 or so years back. Which meant he could buy a property with not too much of a mortgage.

 

[CaptJCool]

Correct @Pushka, you and MrP couldn't be (as I know you) in a Commonwealth Government non-funded superannuation fund (or similar) where the benefits are paid from consolidated revenue (and therefor have yet to be taxed). That's why they have 30% taxed on any lump sum withdrawals (or fully taxable if they are taken as a pension benefit).

Where your son is a resident is not relevant. The first and only question is whether he is a non-dependent, partial dependent or dependent. You can answer that one pretty easily

Plus remember the above commentary from the ATO website relates only to the taxable component of your super benefit. The tax free component is already (and will always be) tax free to anybody receiving the benefit.

Yeah I’m in one of those exotic ComSuper funds which by the way are never completely tax-free...
CSS pension after 60 (page 2) - Superannuation. Only about 100,000 in it, lots of people frcoed out when govt sold off Telstra, CSL and whatever else. And when they offloaded Aussie Post alongside a pile of people who switched schemes in 1990-91 because the then new, now closed PSS promised better returns for short stayers in the APS!

Just rolled by preservation age and the smaller tax cut has happened alongside a hefty CPI rise.

Despite still forking out a fair chunk of change on income tax, that recent adjustment (tax saving/CPI) now pays for all the weekly coffee.... the age 60 tax cuts will pay for the yearly first class airfare.

not too fazed of doing the whole re-contribution creating tax cuts pushing towards tax free thing which is much like the AFF Purpose of flying first class free... (because of all the ideas here)

at the point of age eligibility for Comm seniors health care card, it’ll be a handy addition to prune taxable income to meet the income test ... save, invest, gamble...

 

[Pushka]

Correct @Pushka, you and MrP couldn't be (as I know you) in a Commonwealth Government non-funded superannuation fund (or similar) where the benefits are paid from consolidated revenue (and therefor have yet to be taxed). That's why they have 30% taxed on any lump sum withdrawals (or fully taxable if they are taken as a pension benefit).

Where your son is a resident is not relevant. The first and only question is whether he is a non-dependent, partial dependent or fully dependent. You can answer that one pretty easily

Plus remember the above commentary from the ATO website relates only to the taxable component of your super benefit. The tax free component is already (and will always be) tax free to anybody receiving the benefit.

I'm sorry to be rehashing this but I seem to be getting conflicting information. Now, this isn't financial advice

Lets be generic and say for a superannuation fund, where a binding agreement is place where the person nominated is financially independent, and where all taxes (15% plus) were paid on every contribution to the fund, that there is no further tax for that non dependent to pay on receipt of all funds on death of the member and which has to be in a lump sum?

 

[ellen10]

I am wanting to take a small lump sum from my superannuation (just turning 65 soon and retired last year). Can I choose to take it from either the taxable or no taxable component? Or does the fund direct this?

Husband also has some super money he is 69. Is it better to take from his super account?

At this stage we don't draw down a fortnightly pension component from either fund.

 

[QF WP]

I'm sorry to be rehashing this but I seem to be getting conflicting information. Now, this isn't financial advice

Lets be generic and say for a superannuation fund, where a non binding agreement is place where the person nominated is financially independent, and where all taxes (15% plus) were paid on every contribution to the fund, that there is no further tax for that non dependent to pay?

Generally, most superannaution funds won't allow a nomination for a non-dependent. In the event that one is in place, then at the point of claim, the Trustee will determine who (if anybody) is beneficially entitled by requesting copies of Wills, Statement of Dependence from living family adn then make a decision. Often, to obviates them of any liability, they chose to pay to the Executors (Executrixes) of the Estate [again, assuming there is a valid Will in place]. Let's not go down the rabbit hole of intestacy.

 

[Pushka]

Generally, most superannaution funds won't allow a nomination for a non-dependent. In the event that one is in place, then at the point of claim, the Trustee will determine who (if anybody) is beneficially entitled by requesting copies of Wills, Statement of Dependence from living family adn then make a decision. Often, to obviates them of any liability, they chose to pay to the Executors (Executrixes) of the Estate [again, assuming there is a valid Will in place]. Let's not go down the rabbit hole of intestacy.

It baffles me why a third party gets to make decisions about someone else's money when there are clear directives in place. I know we can nominate more than one person to be binding beneficiary and we have to apportion that percentage. But It makes no sense to do that while spouse is in play and they are the only dependent. The form that HESTA provides states that a child 18+ is no longer considered a dependent unless I guess there are special reasons. It also says that their benefits may be subject to tax. so confusing. You can nominate Spouse, Child, and also whether they are financially dependent. Gosh. Thought it was our money.

In this snip there is no mention or delineation of whether inheritance comes from the tax free part of the super. It's a flat statement.

https://www.hesta.com.au/content/dam/hesta/Documents/How-super-is-taxed.pdf

 

[QF WP]

I am wanting to take a small lump sum from my superannuation (just turning 65 soon and retired last year). Can I choose to take it from either the taxable or no taxable component? Or does the fund direct this?

Husband also has some super money he is 69. Is it better to take from his super account?

At this stage we don't draw down a fortnightly pension component from either fund.

No, the fund will take it proportionately from each component, in line with legislation.

Impossible to tell from where I sit - there are so many variables that I look at with clients before I know from whose super (or pension) account clients take funds. Questions such as relative size of respective balances, whether on Centrelink (Age Pension or similar), et al

 

[andye]

For non dependants the best option is for the superannuant to withdraw their super on their deathbed and have it form part of their estate ,to be dealt with as outlined in their will

Interested in how that works in practice. A reasonable proportion of those in the final days of life would be incapacitous (in the legal sense). Any problem with it being challenged? Is it something that could be part of an advanced directive?

 

[ellen10]

Thank you @QF WP for your reply. I will look into it a bit further.

 

[Pushka]

Interested in how that works in practice. A reasonable proportion of those in the final days of life would be incapacitous (in the legal sense). Any problem with it being challenged? Is it something that could be part of an advanced directive?

Power of Attorney would sort it. If I'm the surviving one I am withdrawing it all too. Just have to hope the law doesn't change in the meantime because well, politicians see our money and want it.

 

[QF WP]

It baffles me why a third party gets to make decisions about someone else's money when there are clear directives in place. I know we can nominate more than one person to be binding beneficiary and we have to apportion that percentage. But It makes no sense to do that while spouse is in play and they are the only dependent. The form that HESTA provides states that a child 18+ is no longer considered a dependent unless I guess there are special reasons. It also says that their benefits may be subject to tax. so confusing. You can nominate Spouse, Child, and also whether they are financially dependent. Gosh. Thought it was our money.

In this snip there is no mention or delineation of whether inheritance comes from the tax free part of the super. It's a flat statement.

View attachment 316406

Unfortunately it's a simple and yet complex answer all at once. Superannuation law. Even with apparent clear directions in place, others can challenge in a court of law. The only winners are the legal profession. There are plenty of people who feel aggrieved it they aren't left [any or sufficient - in their eyes] as a bequest in a Will, or as beneficiary of a superannuation fund. So off they go to court with the Estate generally paying for the legal fees.

I am reading reviews of court cases (mulltiple ones each week) of decisions handed down in these situations. it's mind boggling the audacity of some litigants - particularly doctored (or false) Wills or letters of direction.

 

[Pushka]

Unfortunately it's a simple and yet complex answer all at once. Superannuation law. Even with apparent clear directions in place, others can challenge in a court of law. The only winners are the legal profession. There are plenty of people who feel aggrieved it they aren't left [any or sufficient - in their eyes] as a bequest in a Will, or as beneficiary of a superannuation fund. So off they go to court with the Estate generally paying for the legal fees.

I am reading reviews of court cases (mulltiple ones each week) of decisions handed down in these situations. it's mind boggling the audacity of some litigants - particularly doctored (or false) Wills or letters of direction.

It's at times like these that I really appreciate the unity within my family. Has so far never failed us, not that my side ever had much money. Guess that helps. Our distribution will be in line with our will so that's got to count.

 

[QF WP]

For non dependants the best option is for the superannuant to withdraw their super on their deathbed and have it form part of their estate ,to be dealt with as outlined in their will

For any of my clients that have terminal illness diagnoses, then we often suggest taking any super or pension benefit in cash before they die and distribute it now, so they can see the value wrought by each family member (often called "advanced estate planning). This is particularly beneficial when large amounts of money are invested in bank accounts (or similar); or super/pension funds where the taxable component is significant and they only have non-dependants.

In that way, the funds are no longer part of their Estate as they have been distributed, so no longer an issue. But there will likely still be some Estate assets to distribute...

Interested in how that works in practice. A reasonable proportion of those in the final days of life would be incapacitous (in the legal sense). Any problem with it being challenged? Is it something that could be part of an advanced directive?

If they don't have capacity, then it shouldn't be attempted unless an Enduring Power of Attorney exists. Even then, if the EPoA('s) are beneficiaries of the advanced estate planning and others believe there was possible coersion, elder abuse (or similar), absolutely it could be challenged.

Power of Attorney would sort it. If I'm the surviving one I am withdrawing it all too. Just have to hope the law doesn't change in the meantime because well, politicians see our money and want it.

You know that superannuation legislation is going to change between now and then (nothing surer), but just by how much??

 

[Pushka]

You know that superannuation legislation is going to change between now and then (nothing surer), but just by how much??

oh yes. And I also know that PoliciticIan's super won't be impacted by it. We will need to make plans at the sniff of a change.

 

[Pushka]

So I’m currently at a Hesta seminar about to start. So many people coughing sneezing and blowing noses. None wearing masks. There are people here who work in aged care! Gosh people are selfish prats.

 

[VPS]

oh yes. And I also know that PoliciticIan's super won't be impacted by it. We will need to make plans at the sniff of a change.

That’s why I’m happy to stay with the state super where all the politicians have their money

 

[Pushka]

Quite informative. The tax that non dependents receive from the super payout is at their marginal tax rate with 15% discount plus Medicare. So could be higher than 17%. Annoying how the income protected on retirement for a comfortable lifestyle is based on also receiving a Centrelink benefit then they admit that the amount that the super fund would have to be on Retirement would fail the assets test anyway so rather pointless exercise.

Binding agreements cannot be challenged. Must get ours signed. Then review as needed. But more likely we will withdraw as lump sums over a period of time for the foreseeable future. Everyone seemed quite clued up and asked good questions.

Oh and our goodie bag contained two purple (for HESTA) cloth face masks. Too late.

 

[JohnK]

So you've hit preservation age or age 60.

In 3 days I reach my preservation age of 59.

I'm not sure I want access to my money early. Knowing me I'd blow most of it on status runs, mattress runs, golf and alcohol before I retire and the rest on gambling.

Allocated pensions and annuities were good once upon a time but think that boat's sunk.

 

[andye]

In 3 days I reach my preservation age of 59.

I'm not sure I want early. Knowing me I'd blow most of it on status runs, mattress runs, golf and alcohol before I retire and the rest on gambling..