How Budget Changes will affect your Estate Planning


May 8, 2016


Last week the Federal Budget put forward a number of significant changes to superannuation which are designed in some shape or form to generate additional revenue for the Federal Government.  The retrospective nature of some of the changes has disappointed many, and may have a significant negative impact on the retirement and Estate Planning issues surrounding your Superannuation fund account balance.

Many Australians are not aware that in most circumstances a taxing event occurs when both the husband and wife are deceased, and their remaining superannuation balances are paid out to their adult children. A tax payment is triggered on the death of the last Parent.

The majority of Australian families have not experienced the financial impact of these tax assessments.  The “Timeline of Life”, means baby boomers have started to enter retirement but are not leaving this world in large numbers yet. But, as the mortality rate of this group of taxpayers increases, more Australian Families will experience the financial impact of this taxing event.

This fact, together with the other proposed changes will require the trustee and members of a Superannuation Fund to look carefully at the Investment Strategy of the Fund and consider more closely how they manage the Estate Planning issues for the members.

Already we have had a number  of discussions with clients about how they can amend (implement) their estate planning to take into account the proposed changes.

The proposed changes do highlight some important themes that will play out with regard to the taxation of superannuation benefits now, and on the death of the members in the years to come.

It is essential that all Australian Families understand how this interplay of themes will impact upon them, so appropriate advice is essential. No wonder the Government is predicting a return to surplus over the medium term.

As the old saying goes “Nothing is more assured than Death and Taxes”

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