Here's what you need to know about superannuation, SMSFs and trusts

The highest rate of increase in homelessness and poverty in Australia today is being experienced by women over 55 years of age. Knowing how to protect and maximise your assets is key to not being part of these statistics.

Women face specific issues in relation to the law, however until recently there wasn’t a free resource available in Australia to help women understand the law as it applies to key areas of their lives including health, work, family breakdowns, money and growing older.

Recognising this important need, Catherine Henry Lawyers developed Women and the Law: A guide to help women navigate the legal system. Created by women, for women, it looks at the issues and provides information and tips for women to protect themselves as well as seek justice or compensation. The following is an extract from the chapter Women, Money and the Law, published here with full permission.

Superannuation was made compulsory in Australia to help Australians to better financially prepare for a retirement.

We are living longer but our financial planning has not kept up with the advances in our medical health, meaning that there is often a strain on finances in later years. The increasing divorce rate, especially amongst retirees is also reducing women’s net worth at a time in their lives when they no longer have the earning capacity to rebuild their wealth.

This makes superannuation very important, in two ways.

1. If you are separating from your partner. Make sure that you get advice on your entitlement to superannuation as it will become very important to you in your later years.

2. You need to think about management and control of your superannuation in your later years.

If your superannuation is held with a large retail fund, then most of the day to day management of your account will be done by a professional trustee. You should ensure that you nominate a beneficiary (or multiple beneficiaries) in case something happens to you, or else the professional trustee will make that decision for you.

If your superannuation is held in a Self-Managed Super Fund (SMSF), then most of the day to day management of the fund is your responsibility. In that case, you should consider – in advance – what will happen if your partner dies, or you become ill or unable to manage the SMSF yourself. For example, most SMSFs will require two trustees, so if something happens to your partner, that may mean that one of your children (or perhaps one of your partner’s children) are appointed as a trustee instead. That may mean that the child then has a significant amount of control over your superannuation and may potentially alter how much is paid, to whom and when.

SMSFs are legally ‘trusts’ so if the trust in the relationship breaks down, then the control and operation of the SMSF may also break down or not continue to operate how you had expected it would.

If you would like to plan in advance for how your SMSF might operate if something happens to yourself or your partner, then you should speak with your lawyer, and potentially change the provisions of the trustee company regarding control and decision making or put in place corporate powers of attorney for the trustee company. Alternatively, you may decide to move your superannuation to a retail fund if something happens to yourself or your partner.

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All information provided in the magazine is sourced from independent writers & may contain general advice that is not endorsed by the FairVine Super Plan.