Many Canterbury clients own properties within their Self-Managed Super Fund (SMSF).
This message is to outline the importance of staying close to Canterbury over the years, even in what might seem to be a minor decision. Sometimes a “little thing” can come with a big cost.
There are things that many people are not aware of. Sometimes it is a case of not knowing what you don’t know.
DEATH TALK For example, changes to death benefit nominations in your SMSF can have significant tax and pension entitlement implications.
A problem can occur with superannuation because most people take it for granted, they can sometimes be a bit careless with their decisions.
They say that…. A STITCH IN TIME SAVES NINE.
This means that if you fix a small mistake quickly, it prevents
the mistake from getting bigger later.
Look at this one example. An elderly couple who started with us too late to enjoy the wealth creation via a personal portfolio. All we had time for was to set up a measure of wealth (around $800,000) within their SMSF.
The couple decided one afternoon while enjoying afternoon tea that they would change the beneficiary of their superannuation fund from each other (the opposite spouses) to their two adult children.
The logic to this was that they worried if the $800,000 went to the opposite spouse, it would ruin their part pension.
They were not aware of the fact that if the $800,000 went to the two adult children, $136,000 tax would apply. If the money goes to the children, there will be tax to pay on the taxable component of the super fund.
This is in contrast to the fact that if the money goes to either spouse it is tax free.
The reason for the difference is that spouses are deemed as dependants on each other, whereas adult children are not considered dependants under tax law.
Think how hard it is to accumulate $136,000 in cash – and one innocent mistake can wipe it out.
At Canterbury we plan that all clients build up significant assets, both personally and within SMSF over the years we spend together. We want you to keep all of your gains, not just part of them.
The above couple met Canterbury later in life than would have been ideal.
The good news is that there was an easy solution to the above problem. They were able to merely change their superannuation beneficiaries back to their original arrangement – with each spouse as beneficiary.
With both aged in their late 70’s surely this was a case of “A stitch in time”.