With Zach Webber | Associate Adviser
Your superannuation is likely to be one of your most valuable assets. The importance of pre-planning and understanding exactly where your super goes should you die is often highlighted by your superannuation fund.
However, many of our clients are surprised when they learn that their superannuation account does not form part of their estate.
The person or people who will receive your superannuation death benefits is not determined by your Will. Unless otherwise nominated, it is in the discretion of the trustee of your superannuation fund to determine who will receive the superannuation death benefits, choosing from a range of your taxation dependants including your spouse, former spouse, dependant children, etc.
Most super funds allow their members to make death benefit nominations, but did you know that there can be significant tax consequences depending on who you nominate as your superannuation beneficiary?
The complication with tax consequences arises due to the discrepancy in the definition of the term dependant. While a person may be considered dependant under superannuation law, that same person may not be a dependant under tax law. As such, care needs to be taken when nominating your beneficiaries.
Being dense with information and a time-consuming topic to research and come to grips with, we have put together a succinct infographic that covers the Tax Consequences of Superannuation Beneficiary Nominations, and provides a visual example of the tax implications for a lump sum super benefit paid to a dependant nominee versus a non-dependant nominee.
We strongly recommend you discuss your personal circumstances with a Financial Planner to ensure your nominations meet your personal needs and take into account the specific tax consequences of your situation.
Tax Consequences of Super Beneficiary Nominations Infographic
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