The preparation of your estate plan involves a number of matters, especially the payment of your superannuation death benefit.

From 1 July 2017 a “Transfer Balance Cap” was introduced.  In broad terms, the effect of the Cap is to limit the total amount of superannuation a person can hold in pension phase without additional tax being payable by them.  The Transfer Balance Cap was originally $1.6M and has been increased to $1.9M – but you need to meet certain criteria for the $1.9M figure to apply.

Your Transfer Balance Cap is not just made up of your own funds.

It is important to be conscious of the issue that can arise if you pass away and pay your superannuation death benefit to your spouse.

If your spouse receives your superannuation death benefit, those funds will be taken into account in determining their Transfer Balance Cap – which may mean your surviving spouse exceeds their Cap and faces the payment of additional tax.

It is just another example of the need to obtain the right legal, financial and accounting advice when preparing your estate plan –  particularly the most appropriate way to structure the payment of your superannuation death benefit.