Given the complexity involved in the day-to-day administration of your client’s SMSFs, it would not be surprising if much of your time is spent dealing with all the immediate SMSF tasks at hand.
Meanwhile, with an increasing number of your SMSF clients moving into the latter stages of their retirement and approaching their final countdown, their minds may be more focussed on their financial legacy.
Making the review of your client’s death benefits a regular part of your client service can be enormously beneficial. You can help your client leave a better financial legacy and be in a better position to communicate that legacy to those left behind.
Regular Check In
Simply adding a check in about death benefits is one way to approach this difficult area. For example, you can let your client know that you will be making it part of your SMSF meetings with them and covering off things like:
Who decides how your superannuation is paid when you die?
Many people think that their legal will deals with their superannuation benefits automatically. Having the deliberate conversation with your client to inform them that this is not in fact correct, can open the door to further discussion.
What do you really want to happen?
Clients may have strong opinions on exactly what they want to happen with their superannuation monies when they die or they may not actually care. Being able to record your client’s preference can help you educate them on the options available for recording their wishes or for seeking further specialist legal advice.
What documents do you currently have in place for your superannuation benefits?
Being able to assist your clients to put in place documents that reflect their wishes is a valuable service. For those with death benefit nomination documents already in place, reminding them about what the documents do and how they work in with the SMSF Trust Deed can help your client better communicate their wishes to their family.
Asking about changes?
Talking to your client about this difficult area may enable you to properly update their death benefit nominations for changes and may also open the door to discussions about other critical matters affecting the operation of the SMSF such as incapacity.
Optimising Outcomes
Now that you better understand your client by having a regular check in with them, you are better positioned to optimise the outcome they are seeking.
You can work with your SMSF client to show them how certain action can tie in with their desired outcome. For example:
Chain of Deed Review
If they want the comfort of knowing that their documents are valid and will deliver the outcome they are after, then you can suggest that they have them checked. A proper chain of deed review including their death benefit nominations can deliver your clients the comfort they need.
Review Trustee Arrangements
You can also readily discuss what trustee arrangements will be appropriate for your client’s changing circumstances. In addition, you can discuss plans when a member dies and how this will affect the trustee structure.
Specialist Legal Advice
The check in may lead you to discover complexity in your client affairs that warrants specialist legal advice and you can assist by making an appropriate referral.
Specialist Investment Advice
How death benefits are paid may be impacted by the types of investments held, particularly if they are illiquid. You can assist your clients by making a referral to a licenced financial planner to review their liquidity, insurance and other investment considerations.
Benefit Structuring
You can also more carefully delve into whether a condition of release has been met and be timelier as to your guidance regarding the structuring of benefits, particularly tax strategies that minimise tax on your clients death benefit payment.
Changing how you do things
For clients with personal concessional contributions, you may be in the habit of completing the Notice of Intent and Trustee Acknowledgment at financial year end. As your clients age or their health conditions change, it may be prudent to arrange this signing with each contribution that is made. It is more work, but it makes sure that the claim is valid in all circumstances and can avoid unwelcome outcomes, particularly in a year your client is making other contributions.
You can play a vital role in giving your client peace of mind and helping them access the specialist assistance they need to leave the financial legacy they envisage.
Keep It Simple Super provides tailored Australian based SMSF services to Financial Advisers and Accountants that achieve best practice compliance and mutual benefit through simple, hassle-free solutions. We help Financial Advisers and Accountants grow their business with the confidence that their Self- Managed Super Funds are compliant and lodged on time.