When there is no tax dependent to receive a member’s superannuation death benefits tax-free, a potential tax saving strategy is to withdraw their entire super benefits prior to their death. The money then becomes their ‘personal asset’ which can be distributed tax-free to any non-tax-dependants such as the member’s independent adult children.
BDBNs
SMSFs and binding death benefit nominations – where is your limit?
The superannuation environment may offer great tax efficiency in passing a member’s death benefits to their dependents, however there is a rider – the member will not have full control over how the benefits will be used by the beneficiary.
Disadvantages of using conditional BDBNs
A nomination to a spouse is not automatically revoked on divorce or re-marriage.
Advantages of using conditional BDBNs
As the super death benefit is not dealt with by Will and does not form part of the client’s estate, it will not be subject to a challenge to the estate.
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