North Sydney Commercial Lawyers

Life Insurance and an SMSF Investment StrategyPrint This Post

Life Insurance and an SMSF Investment Strategy

Estate Planning Update – Autumn 2013

In the past, there were no express legislative provisions requiring the trustee of an SMSF or other superannuation fund to consider the life insurance needs of fund members in the investment strategies put in place for each fund member. The federal government has introduced amendments to the superannuation law that now require trustees to do so.

The effect of this amendment may be to see more life insurance proceeds available when fund members die prematurely. Hopefully it will also see those proceeds working to maximize the benefit to the insured or the insured intended beneficiaries, e.g. by maximizing the income tax benefit of the proceeds via the use of child death benefit pensions or superannuation death benefits trusts, thereby providing surviving parents with more funds to raise and educate a child.

It is also important that death benefits do not end up funding challenges in the Superannuation Complaints Tribunal (not possible if the fund is an SMSF), deceased estate challenges or (if the superannuation fund is subject to NSW Law) notional estate challenges.