16 October 2019

SMSFs: the new battleground for family disputes?

In this video series, our Private Clients team examines the five key self-managed super fund (SMSF) estate matters you must talk to your client about.

Over the next five weeks, our team will cover issues such as dealing with control of SMSFs, powers of attorney, transfer balance cap strategies and using death benefit nominations, as well as highlighting the effect of an ineffective SMSF strategy in some recent cases.

In this first video, Senior Associate Sam Baring explains why the SMSF conversation with clients is so important. There are nearly 600,000 SMSFs in Australia, many of which hold the greatest pool of assets for clients. Unfortunately, we see many instances where the SMSF has been the forgotten part of the succession planning puzzle.

In the past it has been very easy for clients to complete a standard death benefit nomination (DBN) form to deal with the assets of the SMSF. While that often works for situations where there are happy families and simple scenarios, increasingly we are seeing that the SMSF is the new battleground for family disputes.

Shifting the mindset of clients from only considering a DBN to thinking more broadly about their SMSF and their succession planning goals can be a difficult discussion for advisors. However, in our view, this needs to be considered as a key component of the succession planning process, and is best done in conjunction with a review of wills, powers of attorneys and succession of trust control.

While some clients may initially baulk at the time and cost involved in considering their SMSF and succession, making clients aware of the potential issues, especially where they are in higher-risk circumstances (such as blended families) and implementing an effective strategy to minimise those potential issues, will add value for your clients, give them peace of mind and only further strengthen your relationship as a trusted advisor.

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