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SMSF & the daunted Widow

Updated: Apr 29, 2019

Being involved with Super, mainly SMSF's over the years has exposed me to witness, first hand, some pretty tough emotional circumstances, especially surrounding prolonged sickness with capacity loss and a sudden unexpected Death within a couple. These two circumstances are not predictable, however when they come with no forward planning, it's a nightmare and imposes pressure and uncertainty on the spouse or the surviving Widow.

(See Capacity & your SMSF to explore capacity further)

The majority of wealth and inadvertently Superannuation savings in this country is held by our Baby Boomers. The average balance of a member aged from 65 to 84 is approximately 1 Million per person, this makes up 32% of all SMSF members, the male to female balances are fairly even*. It's no secret that women live longer than men & men in this demographic mainly control the day to day running of their SMSF's investments and management. With this control comes responsibility and there are items you need to understand, if not for your own benefit, but for that of whom you leave behind...

A couple of notes from first hand practice, especially within the estate planning area:

  1. Documents including pension minutes with reversionary beneficiary nominations & Binding Death Benefit Nominations are either not on hand, not been executed correctly or effectively absent completely.

  2. Outdated or inadequately written trust deeds; Can we even make a reversionary beneficiary nomination? How should the Binding Death Nomination be written & does it lapse?

  3. The Super Fund still holds an individual trustee structure as apposed to adopting a corporate trustee structure, the paperwork to convert this after death of a member can be time consuming as a full SMSF name change needs to occur against all SMSF asset holdings, bank accounts and property titles.

  4. There is no Enduring Power of Attorney (EPOA) in place for the members, so no decisions can be made should a member become incapacitated.

  5. People hand me their partners final Will and believe the Super interest is governed by the wishes embedded within this Will, when it is not automatically. This is a shock to a Widow who's next question is, 'Well what do I do now?' and we go back to point 1 above.

  6. Trading accounts and the paperwork needed to lodge the annual return and pass the Annual Audit, this is not at the forefront of a grieving widows mind, is an SMSF still appropriate for them? Or will the time required to mange an SMSF be a burden?

  7. Other concerns a widow might raise are usually in relation to the monies left and the longevity and management of this money. Seeking a relationship with a Financial Planner prior to needing the service is ideal.

  8. Lastly, what can the widow now do to make certain that their entire super balance goes to their children or final beneficiary in a straight forward manner when they pass away?

If any of the above does not make sense to you, you need to contact a qualified adviser who has experience with SMSF's and estate planning issues and has walked through it themselves. At the end of the day, there are terms used above you each need to be versed in, understand and own. You need an estate plan and you need to understand what your partner will be looking down the barrel at when you're gone. Picking up the pieces later is something you won't see, and without you're emotional and practical support, you will leave behind a daunted widow.

Let us know if we can be of help, happy to chat about your current situation and concerns.

* ASIC REPORT 575: SMSFs: Improving the quality of advice and member experiences

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