Specialist trustee company Equity Trustees reports legal disputes over SMSF trusts are on the rise, especially when it comes to estate planning.
Equity Trustees put the increase in legal disputes down to an influx of customers to the self-managed super realm using do-it-yourself or 'off-the-shelf' trusts.
"A common issue we see with trusts is where someone has gone to their accountant to seek advice on how to minimise tax. The accountant then uses an off-the-shelf trust which is often not drafted properly," said Marie Brownell, Equity Trustees' national manager of estate planning.
"Australians are a nation of DIY fanatics but trusts are complex legal structures and not something anyone should create without specialist legal advice."
Equity Trustees cited 2020's 'important' case of Wareham v Marsella in the Supreme Court of Victoria as reason for establishing a binding death benefit.
Ms Brownell said the case highlights the importance of knowing an SMSF's trust's rules.
"It’s often forgotten that superannuation death benefits do not automatically fall into the estate for distribution in accordance with the will," she said.
"In the absence of a binding death benefit nomination, the trustee of the fund will decide who gets the benefit.
"What’s usually overlooked is who that continuing trustee might be. If it’s someone who stands to benefit themselves, in a manner contrary to your wishes, then you need to carefully consider what steps you need to take to ensure your death benefit is paid as you intend."
Popularity of SMSFs on the rise
ATO data for the June quarter indicates there were 597,900 SMSFs in Australia comprising of more than 1.1 million individual members.
This is an increase of 4% in the number of SMSFs compared to June 2020, and nearly 9% compared to five years ago.
The average SMSF held an average of $1.3 million in assets in the 2018-19 financial year, up 22% from five years prior, for a total of more than $822 billion in Australian assets.
In the June 2021 quarter there was just under $57 billion in limited recourse borrowing arrangements (LRBAs) on the books, more than double from five years ago.
Approximately $212 million of assets was held in cryptocurrency, up 11.57% in less than two years.
Looking to take control of your retirement? This table below features SMSF loans with some of the most competitive interest rates on the market.
|Advertised rate||Comparison rate*||Monthly repayment||Rate Type||Offset||Redraw||Ongoing Fee||Upfront Fees||LVR||Lump Sum Repayment||Additional Repayments||Pre-approval|
|FEATUREDSELF MANAGED SUPER FUND LOAN|| |
SMSF Loan (Principal and Interest) (LVR < 70%)
Liberty SuperCredit SMSF (LVR < 60%)
- Easy refinance process
- No application fee and no settlement fee
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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of January 17, 2022. View disclaimer.
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