Estate owners often assume death to be a third-party occurrence. Unfortunately then, when they cross the last bridge, they still have a poorly drafted will, no clear direction of passage of benefits and a beeline of relatives fighting for the pie.
How often do you think about how your SMSF investments should be passed on? Have you given this dimension of estate planning a serious thought?
Joint members of SMSF account
Let us assume a case where a couple opens an SMSF account and are its only members. Let us further assume that in the event of the demise of one, the other becomes the sole trustee of the fund. What if the deceased in question gets a will drafted wherein he or she specifically asks for the benefits/entitlements of the SMSF not to pass to the spouse? Additionally, what if the deceased fails to state in the will (give no clear direction) that the entitlements be passed on to the children?
Conti case ruling
I have seen cases, the kind that is typically manifest in the Loppolo and Hesford versus Conti ruling, that the executors of the will are left in a stupor? They have lost powers on how to pass on the benefits simply because they are not appointed the trustees and the spouse left behind as the sole trustee opens a new trustee company to manage the death benefit of the deceased- obviously in his favour.
Executor’s rights
The court in the Conti case laid to rest any assumption made by the executors that they had a right to be a trustee by default. Newsflash- they don’t. The case I have mentioned above also delineates distinctly why a Binding Death Benefit Nomination (BDBN) despite being a contestable document, is still a strong piece in writing- one that at least gives a direction to the deceased’s estate planning.
How have you tackled your BDBN?
