Estate Planning and SMSF : Leveraging the Power of SMSF

Estate planning and SMSF can play a large role when it comes to Estate planning, which is an often-overlooked aspect of financial planning when executing your Will, superannuation, and wishes.

Estate planning determines how your assets will be distributed once you pass away. However, estate planning can be complicated and overwhelming, which is why Self-Managed Super Funds (SMSFs) have become popular.

SMSFs are a powerful tool for estate planning and managing your retirement savings.
Whether you’re new to estate planning or simply looking for a more efficient way to manage your assets, leveraging the power of SMSF can help you achieve your financial goals and ensure that your assets are distributed according to your wishes.

estate planning

Understanding SMSF and its benefits for estate planning

SMSF is a type of super fund that is managed by its members. It provides more flexibility and control over your retirement savings compared to the public APRA super funds. SMSFs can invest in a wide range of assets, including property, shares, and managed funds. This makes them a popular choice for those who want to take a more active role in managing their retirement savings and buy property direct.

Estate planning and SMSF provide benefits for estate planning that should not be overlooked. Unlike other super funds, SMSF members have more control over how their assets are distributed after their passing. With an SMSF, you can nominate who receives your benefits and how they are distributed. This means your assets can be distributed according to your wishes, which can provide peace of mind for you.

SMSF vs. other estate planning options

An SMSF forms part of a structure to manage your estate planning wishes. This, combined with your wills, a family trust and other measures, ensure the correct outcome.

SMSFs also provide tax benefits for estate planning. For example, assets held in an SMSF are not subject to capital gains tax (CGT) when they are sold after the member’s death. This can provide significant tax savings for your beneficiaries.

Creating an estate plan using SMSF

Creating an estate plan using SMSF involves several steps.

We first must look at the Fund’s assets and the members’ wishes. Look at the age and composition of your SMSF . Are there others in the Fund that may continue after your death?


Those in pension mode may choose to allow the Death Benefits to be rolled over to a remaining dependent in the fund via the use of a reversionary pension. The advantage to this is that the benefit does need to come out of Super.


Other members may choose to prepare a binding death benefit nomination (BDBN). This legal document specifies who will receive your benefits and how they will be distributed after your passing.
When creating a BDBN, it’s important to consider the needs of your beneficiaries. For example, you may want to provide for your spouse’s retirement needs or ensure that your children receive an education. You should also consider the tax implications of your estate plan and how they will affect your beneficiaries.
Once you have created a BDBN, you should review it regularly to ensure it still reflects your wishes. You should also keep your beneficiaries informed of your estate plan so they know what to expect after your passing.

Understanding who is a dependent for Superannuation purposes

Under the Superannuation Industry (Supervision) Act 1993 (SIS), benefits may be paid to one or more of the member’s dependants or their legal personal representative (LPR), i.e. the estate, subject to the fund’s governing rules.(check Trust Deed)

A dependant for these purposes (known as an SIS dependant) includes:
• the member’s spouse – legally and de facto
• the member’s child (of any age), and
• someone with whom the member has an interdependency relationship (generally someone with whom the member has a close personal relationship and lives, and where one or each of them provides the other with domestic support and personal care).

A “SIS dependant “also includes someone who is a dependant within the ordinary meaning of that term (an ‘ordinary meaning’ dependant), such as a person who may not be a spouse or child but who depends on the member financially. If an individual is not an SIS dependant, they can only receive a member’s death benefits via the deceased member’s estate.

Common mistakes to avoid in SMSF estate planning

There are several common mistakes to avoid when creating an estate plan using SMSF.

These mistakes include:
• Failing to create a BDBN: Without a BDBN, your benefits may not be distributed according to your wishes.
• Failing to understand who may control your SMSF after your death.
• Failing to have your Trust Deed updated regularly and referring to this in the Estate planning process.
• Best practice is to have a corporate trustee
• Failing to set up the right pension and the conflict between DBBN and reversionary pension.
• Failing to recognize who is dependent vs nondependent.
• Failing to review your estate plan regularly: Your circumstances may change over time, so it’s important to review your estate plan regularly to ensure it still reflects your wishes.
• Failing to keep your beneficiaries informed: Your beneficiaries should be informed of your estate plan, so they know what to expect after your passing.

Choosing the Right Accountant for estate planning

Choosing the right SMSF provider is important for estate planning. You should look for a provider that has experience in estate planning and can provide professional advice.
Our role at Gartly Advisory is to help advise Trustees in the Estate Planning process.
In many cases, we will assist the Trustee in the decision process of whether it is appropriate to wind up the SMSF and to be strategic about their estate planning and smsf.

SMSF estate planning checklist

To help you create an estate plan using SMSF, here’s a checklist of things to consider:
• Create a BDBN and make sure your will works in conjunction with your super strategy
• Review your estate plan regularly.
• Brief your POA and appointer legal representative of your wishes post death as they should be appointed to your SMSF to act post death
• Keep your Deed up to date.• Keep your beneficiaries informed.
• Consider the tax implications of your estate plan
• Choose the right SMSF provider
Estate planning should not be overlooked.

By leveraging the power of SMSF, estate planning can give estate planning control over your retirement savings and can be used to create a tax-efficient estate plan. Peace of mind knowing that your superannuation ends up with the right loved ones is a powerful aspect of having an estate plan.