Posted on October 29, 2015 by Christabelle Harris
Getting ready to retire? If so, it’s not too late to make your retirement more comfortable. Remember, retirement should be when you do all the things you didn’t get the chance to do earlier in life – so you want to make sure you have enough money to enjoy it!
Take time now to do a financial stocktake and see how prepared you are for retirement. Consider asking yourself the following questions:
How much superannuation do I have?
Your super account will be a major source of income during your retirement. Ensure you reap the rewards of clever management and investment strategies.
No matter what you choose to invest your money in, keep in mind diversification of assets is a good tactic. It will ensure any poorly performing investments don’t affect your super balance too heavily.
How much superannuation do I need?
To answer this question, you need to ask yourself another: how do I want to live? A comfortable standard of living is a very subjective concept. The ASFA Retirement Standards estimate that to fund a ‘modest’ retirement a couple would need $33,000 a year. For a ‘comfortable’ lifestyle, you would need an income of around $58,000 a year.
For some, this may indeed contribute towards a good retirement. However, for others used to a higher disposable income, a yearly retirement income of $58,000 will not be enough. We suggest that you may need to think in the long-term. If you are planning on using your retirement to do all the things you’ve been putting off, you should consider taking extra steps to build your nest egg.
What age can I retire?
Generally you can start drawing on your super in some form when you hit the preservation age of 55. To find out when you are eligible, check out ASIC’s retirement calculator.
Even if you can retire, that doesn’t mean you should. It’s a simple equation; the longer you work, the more super you will have. A foolproof means of building a bigger nest egg is to put off your retirement for a few years.
However, this does not mean you have to put off enjoying your super. If you are over 55 and still working, you can set up a Transition to Retirement Pension. This will allow you to access the transition pension and benefit from tax-free investment returns. You can continue to contribute to your super by setting up an accumulation account for your employer to pay into. Setting up a self-managed super fund (SMSF) will allow you to have both the pension and accumulation accounts in one Fund.
Working a few extra years before retirement will give you a few more comfortable years after it.
If you want to learn more about SMSFs, contact Helen Cooper, our Superannuation Senior Manager.
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Posted on April 16, 2015 by Christabelle Harris
A recent decision handed down by the WA Court of Appeal has caught our attention as being “critical” for our Self Managed Superannuation Fund (SMSF) clients and follows on from last month’s Newsletter article.
In late 2013, the WA Supreme Court handed down the decision of Ioppolo v Conti [2013] WASC 389, which was subsequently appealed with the outcome of the appeal recently handed down.
The original case involved Francesca Conti and Augusto Conti, who were married and both individual trustees and members of their SMSF. Francesca had children who were not Augusto’s biological children.
Their SMSF’s trust deed stated that unless there was a binding death benefit nomination, death benefits were to be paid at the trustee’s absolute discretion which is a very common provision of many funds deeds.
Francesca did not leave a valid binding death benefit nomination before she died. In her will, however, she stated that her entitlements in the SMSF were to be paid to her children and specifically stated that no SMSF death benefit be paid to Augusto.
It appears that Augusto had all the power to appoint a new trustee and he arranged for a company called ‘Augusto Investments Pty Ltd’ to be appointed as the trustee of the SMSF of which he was the sole director and shareholder.
With Augusto left as the sole trustee, he decided to pay all of Francesca’s benefits to himself and not to her children as clearly directed in her will.
Two of Francesca’s children were executors of Francesca’s estate, and they brought an action on several grounds. The distribution of the death benefits was at the heart of the dispute.
In the 2013 decision, the plaintiffs, who were Francesca’s children and executors, argued that Francesca’s legal personal representative must be appointed as trustee of the fund because the fund was required to remain a SMSF. This argument failed in the 2013 decision and the plaintiffs lost again on appeal.
There is a common misconception that a trustee’s legal personal representative automatically steps into the role of trustee of the SMSF. Whether or not this is the case will depend on whatever the SMSF’s trust deed says.
If your SMSF has individual Trustees you need to check your trust deed to determine who will be the trustee upon death so as to achieve the desired outcome for the estate.
Many of our clients have a SuperCentral Trust Deed and we can confirm that under the current Governing Rules for the SuperCentral Deed, the Legal Personal Representative of the deceased Trustee will automatically become a trustee of the fund (this is on the basis that the Legal Personal Representative is not a disqualified person according to the SIS Act).
Where a SMSF has a corporate trustee with multiple directors, upon the death of a member, a successor director can step into the place of the deceased member if required or one director can continue to operate as sole director of the corporate trustee.
The plaintiffs also argued in the 2013 decision that because Francesca’s Will directed all benefits to be paid to her children, Augusto had not acted in good faith in paying himself. They lost both the 2013 decision and the appeal.
Our Superannuation Team and our network of Lawyers are well equipped to assist you with any estate planning issues. Call us on 9316 7000 should you require assistance in this area.
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