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SMSF Succession Diagnostic Service

Many SMSF members do not plan ahead in relation to what is to happen with their superannuation upon loss of capacity, death or other relevant life events. Indeed, in DBA Lawyers’ experience, a considerable proportion of SMSFs have outdated, inappropriate or no succession plans in place. Unfortunately, such lack of planning can give rise to significant uncertainties and risks as well as additional legal costs. For example, the absence of an appropriate succession plan may result in a member’s superannuation death benefits being subject to litigation or being paid otherwise than intended.

DBA Lawyers offers an SMSF Succession Diagnostic Service to assist clients who wish to formulate, refine and implement a personalised SMSF succession plan. This service is designed to help clients achieve their succession planning objectives with as much certainty as possible and with a view to minimising the risk of future legal challenges. This service is appropriate for all types of clients, eg:

  • Clients who are just starting their succession planning journey and who need assistance in relation to implementing a clear plan ahead with a strong legal foundation.
  • Clients with well-developed goals and objectives for their SMSF that require specific technical or legal input on their succession plans.
  • Clients who would like a critical legal review of their estate and succession planning documents to identify any potential weaknesses and enhancements to ensure their goals are met.

What is succession planning?

Broadly SMSF succession planning aims to deliver the following outcomes:

  • that the right people receive the intended proportion of SMSF money and assets at the right time; and
  • that the right people have control of the SMSF at the right time (eg, on loss of capacity or death) to ensure that benefits are paid as intended.

An optimal SMSF succession plan should provide for these outcomes in a timely fashion, with minimal uncertainty and in a tax efficient manner.

Naturally, these are only general objectives, and each client may have additional more specific goals. Common goals include retaining the maximum amount in the superannuation environment (eg, making a pension revert to a surviving spouse) and retaining specific assets in the family blood line (eg, where superannuation is paid to the deceased member’s executors and managed in a testamentary trust for the deceased’s spouse and/or children).

Typical issues covered by our SMSF Succession Diagnostic Service

To help illustrate the value of this service, some recent assignments involved:

  • Identifying and rectifying deficiencies in the fund’s document trail that could provide for inappropriate succession planning outcomes and/or avenues for costly legal challenges by disgruntled beneficiaries.
  • Advising and resolving conflicts between binding death benefit nominations, pension documents and estate planning documents to ensure all succession planning documents were consistent and based on a strong legal foundation.
  • Advising clients in relation to how to achieve a legally effective and timely withdrawal of benefits (eg, where a member is over age 60 and has satisfied a relevant condition of release) based on sound legal principles (see here for further information) and preparing appropriate documents that can be relied on.
  • Providing strategic advice on how to address succession planning issues associated with legacy pensions (eg, complying lifetime pension and market linked pensions), including how to ensure there are no adverse outcomes under the transfer balance cap regime and how to manage reserves.

DBA requirements and fee information

The SMSF Succession Diagnostic Service is a consulting service where the scope our engagement generally involves:

  • reviewing relevant background facts and source documents;
  • undertaking required investigation or research to confirm any particular issues and matters that require further consideration; and
  • providing initial oral feedback in a telephone or Zoom conference for up to 1.5 hours.

Our fees for this service typically start from $2,000 + GST and we will be in a position to confirm the fee estimate once we have received initial instructions regarding the scope of the assignment and after we have considered the range and complexity of documents we need to review and provide feedback on.

Naturally, we can also be engaged on the basis of our usual fee rates to provide consulting advice without a formal brief. These rates range between $300 to $700 + GST per hour depending on the lawyer’s experience and qualifications.

Please contact one of our senior lawyers if you are interested in our SMSF Succession Diagnostic Service.

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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.

By William Fettes ([email protected]), Senior Associate and Daniel Butler ([email protected]), Director, DBA Lawyers

1 December 2023

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