When I talk with a lot of my clients about crafting a strategy to ensure that the taxman doesn’t get a share of their super when they pass away, some may say, “Who cares? It’s not my money, I’m dead. Who cares? They can pay some tax on it.”
But for most, avoiding unnecessary payments to the tax office is a priority, as leaving a significant tax burden for beneficiaries is something many want to avoid.
There are strategies we can implement to eliminate or minimise this death tax from superannuation. Towards the end of today’s podcast, I’ll share the strategy I use for many clients to ensure their beneficiaries receive their super without a tax burden.
It’s not just about taxes on the super; it can trigger taxes for beneficiaries on their own income, Centrelink benefits, and more. Failing to implement this strategy can have a significant financial impact on beneficiaries.
You can include it in your will, but you need to do one thing first: a death benefit nomination.
There’s a binding death benefit nomination and a non-binding one. Within each, there’s also a lapsing and a non lapsing option.
A binding death nomination compels the trustee of your superannuation fund to follow your wishes, even if they’re not in the best interest of your assets.
Conversely, a non-binding death nomination allows the trustee to consider your wishes but isn’t mandatory to follow.
So, if you nominate an estranged partner, for example, the trustee will take your wishes into account but isn’t obligated to follow them.