What to do with Superannuation benefits if terminally ill

TL;DR

Learn how to handle superannuation benefits when facing serious health issues and ensure they go to the intended beneficiaries.

Transcript

g'day and welcome to this week's video my name is robert gowdy from consulting private wealth and this week we're gonna have a chat about what to do with superannuation benefits when people become gravely ill and just recently we've had a few clients that had uh brad bad prognosis they had a health event which was very serious and when people have ... Read More

Key Insights

• 🤪 Superannuation benefits without a financial dependent may be subject to high taxes when going to non-financial dependents.
• 🥶 The taxable component of superannuation can be determined by analyzing the superannuation statements, with tax-free and taxable components.
• 😜 Quick withdrawal of superannuation benefits is recommended for individuals over 65 and not working or those who are gravely ill to avoid high taxes.
• 😨 Updating an estate plan, creating advanced care directives, and having a binding death nomination can ensure the appropriate distribution of superannuation benefits.
• 🚕 Consideration of a testamentary trust in the will can provide beneficiary options, tax benefits, and protection of wealth.
• 😷 Power of attorneys, both medical and financial, should be in place for unforeseen circumstances.
• 🤯 Organizing these matters is crucial for a secure financial future and peace of mind.

Questions & Answers

Q: What happens to superannuation benefits if there are no financial dependents?

If someone does not have a financial dependent, such as a spouse, the superannuation benefits may be subject to high taxes when going to non-financial dependents, like adult children.

Q: How can the taxable component of superannuation be determined?

By looking at the superannuation statements, it is possible to identify the tax-free component (non-concessional contributions) and the taxable component (concessional contributions, including personal and employer contributions).

Q: How can one avoid high taxes on superannuation benefits?

To avoid high taxes, it is recommended to quickly withdraw the money from superannuation before passing away. This is possible if the individual is over 65 and not working or if they are gravely ill.

Q: What is a binding death nomination?

A binding death nomination ensures that superannuation benefits are directed to the nominated beneficiary, such as a spouse, rather than being subject to the distribution via a will. This provides certainty and avoids potential tax implications.

Summary & Key Takeaways

• Superannuation benefits without a financial dependent may be subject to high taxes if they go to non-financial dependents.

• The taxable component of superannuation funds can be determined by looking at the superannuation statements, with tax-free components being non-concessional contributions and concessional contributions forming the taxable component.

• To avoid high taxes, it is recommended to quickly withdraw the money from superannuation if the individual is over 65 and not working, or if they are gravely ill.