Advisers overlooking couples with $1.6m
The barrage of superannuation changes has kept SMSF practitioners busy, yet estate planning has been left on the back burner despite the clear implications of the new super rules on that area, particularly for couples with a combined balance over $1.6 million, according to a technical expert.
“What I’ve noticed people doing in the lead-up to 30 June is pretty much ask for help around what they need to do to get to 30 June, so a lot of [the activity] has been around getting funds back to $1.6 million, adjusting contributions, et cetera,” Colonial First State FirstTech executive manager Craig Day told the SMSF Association Technical Day in Sydney last week. “But something many people have not begun to deal with is the estate planning implications of the new super rules. “You’ve heard of it – things like rolling over to create cap space, et cetera, but there’s actually a lot more in it.” Day revealed that during his training sessions with advisers and technical experts around the country, from time to time some advisers had stated since they did not have any clients with balances over $1.6 million, they did not need to worry about the transfer balance cap. “But what if you have a couple that has over $1.6 million and one of them dies?” he said. “You’d want to take their death benefit as an income stream because transfer balance caps die with you and that pension will be reassessed. “So it’s not just individuals with $1.6 million that you need to worry about, you’ve got to worry about couples with more than $1.6 million and go through the implications around the death benefits and consider a number of strategies that you’re going to have to become familiar with when you’re dealing with death benefits.” He highlighted the issue of clients with a combined balance above $1.6 million was going to be one of the most important areas of advice for advisers going forward. “The reason is because you’ll need to put a whole lot of things in place to put the client in the best position and there’s no way the client is going to know what to do [by themselves],” he noted. “And not only that, they’re going to be in a situation where they’re grieving and don’t really want to engage with it, so they’re going to be completely reliant on you to help them through.” That scenario was a huge opportunity for SMSF advisers to demonstrate the value they were adding, as well as being an area where advisers could feel like their job was making a difference, he added.