SuperSecure is essential for anyone serious about protecting the wealth they are building for their family. SuperSecure can be bundled with any SuperShift package and is potentially payable from your super (no out of pocket costs to you). The SuperSecure package includes:
Scenario 1
Mum & Dad pass away tragically and all children are still under 25. The Will funds are held in trust for each child until they are 25. There are powers in the Will to advance money for education, maintenance and advancement in life. What about the income that is not advanced for such purposes? The ATO assess any undistributed income (as no person being entitled and therefore taxes such income at much higher rates). This can result in thousands of dollars per year in un-necessary taxes for each beneficiary that could be avoided with correctly drafted Wills. Unfortunately most Solicitors Wills do not provide for this and it will cost the estate unnecessary tax.
Scenario 2
Mum dies aged 50, all the assets pass to Dad by Will. Dad being 50 as well eventually enters into a new relationship. This relationship continues and they eventually move in together and marry. At age 70 Dad and the new partner separate or Dad dies. The new partner didn’t really have any assets when she entered the relationship. On separation she files for divorce, the potential result being she will receive half of Dad’s assets after a 20 year marriage.
If Dad dies, Dad has left a Will giving his wife a right to reside in the principal place of residence for her life, then reverting to his children when she moves from the home, with the remainder of his estate to his children. The wife makes Family Provision claim on the estate saying this is insufficient, the court agrees (as the 2 children are now adult and have their own successful careers) and gives the wife outright the family home, the superannuation monies and 1 investment property to ensure she has a home to live in and sufficient funds to live for the rest of her life. But most all of these assets were those of Mum and Dad before Mum passed and not contributed to by the new partner, how can that be fair? The answer is, it’s not fair for the original family. The question is what can be done to protect against this?
Scenario 3
Mum and Dad live a long and happy life. Dad passes away at 80. The Will leaves everything to Mum but she decides she doesn’t want the 2 investment properties as the children could have more use for these. Mum also feels it will affect her entitlement to a pension if she kept them. She assigns 1 property each to her children from the estate. The investment properties are now worth $400,000 each and the children, whilst appreciative of the gift, are shocked when they get a bill for stamp duty on the property of $13,490 each. The properties have also increased in value and are now considered a disposal from the estate triggering capital gains tax. Mum is shocked to receive a capital gains bill in excess of $10,000.00, Centrelink are now also aware that Mum has gifted assets she was entitled to and under non-abandonment rules reduce or delete her pension entitlements anyway. You simply wouldn’t transfer the properties to thechildren if you knew that. But you can do all this and best of all pay no stamp duty, capital gains tax or reduce pension entitlements.. potentially saving tens of thousands of dollars. So how is it done?
The Solution
This works by establishing a trust within your Will that if you are survived by your spouse your assets (including superannuation as appropriate) are paid to your estate and held within a trust for whom your spouse, children and other relevant parties are beneficiaries.
The trust is completely discretionary and your spouse is the trustee. Your spouse can pay the income or capital within the trust to any of the beneficiaries in any portion they determine. Your spouse could then transfer the investment properties to the children and they would pay no stamp duty as they are beneficiaries and capital gains would not apply as a capital gains event has not been triggered. This is a $30,000 – $40,000 saving. Most importantly however, is the asset protection abilities of this trust in respect of scenario 2. If the spouse is well advised they would leave the assets (including super) in the estate ‘SuperSecure Trust’. The spouse would have full powers to take whatever funds they require to reasonably live as they have discretion to distribute monies to any beneficiary in any portion, including 100% to themselves. If the spouse separated from the second partner or died before them, then this second partner would have next to no claim under Family Law or Family Provision laws to make claim against funds in this trust. Your assets are then protected for your children in the future. Such a structure requires sound advice in relation to the assets that will form the most substantial portions of your estate, typically superannuation and your family home. It may be prudent in such circumstances that your house be held as tenants in common rather than joint tenants. You must seek professional advice in regards to these strategies and structures.
Super could potentially be your most significant asset, but it may not be paid to your estate. The concept of this Will is to provide for your spouse and family whilst ensuring the balance goes to your children. You need to ensure your superannuation comes to your estate. This is done by ensuring a binding death benefit nomination is lodged with your super fund directing your benefits are paid to your estate. Significant tax advantages lie when your super is held for dependant beneficiaries and a super trust can be included in the Will to ensure this benefit is not lost.
It is important you make proper consideration and seek appropriate advice before setting up an SMSF and/or limited recourse borrowing arrangement (LRBA). Purchasing property can be a major outlay in cost. SSA recommend you seek advice from a property professional prior to making a purchase decision. Consideration should be given to the issues that surround lack of diversification & liquidity when holding predominately one asset class (property) in any wealth creation structure or environment (especially super).
