STRATEGY
Guarding SMSF wealth – part two
In the second part of this two-part series, Grant Abbott discusses why SMSFs remain a good estate planning vehicle and an optimum solution for wealth protection.
GRANT ABBOTT is director of I Love SMSF.
In the first part of this series we looked at how the courts attacked the SMSF of a defendant in a New South Wales family provisions claim – Kelly v Deluchi [2012] NSWSC 841. In that case, Justice Philip Hallen looked at whether the payment of a death benefit from an SMSF to the deceased’s spouse was a relevant property transaction under the notional estate provisions in Part 3.3 of the NSW Succession Act 2006. Hallen stated: “I am satisfied that the basis of a relevant property transaction for the purposes of section 75 has been established and that it is taken to have been entered into immediately before, and to take effect on, the occurrence of the resolution of the trustee, in February 2010, that is to say, after the deceased’s death … In all the circumstances of this case, I propose to make an order designating part of the property held by the trustee as notional estate.”
This case is mandatory reading for all SMSF practitioners and any estate planning lawyer. Coupled with the decision by the Victorian Court of Appeal in Wareham v Marsella [2020] VSCA 92, where the judge removed the surviving SMSF trustee for paying the deceased member’s death benefits to herself and not the estate, well, all is not well in SMSF estate planning. Perhaps that is why so many lawyers pronounce that binding death benefit nominations (BDBN) are totally ineffective and subject to challenge. So do we simply wind up our SMSFs when our clients get older and put everything into a discretionary or family protection trust to shield the benefits from family provisions claims? Absolutely for some cases, but for 80 per cent of SMSFs, if you know what you are doing and know how to structure a client’s SMSF correctly for succession and estate planning protection, the SMSF as a trust is like the king of the castle. Why?
SMSFs are great estate planning vehicles SMSFs have the tax benefits of a superannuation Continued on next page
QUARTER III 2020
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