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Book a FREE consultation
and receive your complimentary eBook

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

Leaving Superannuation & Insurance Proceeds to Your Kids

Thinking about leaving super and insurance to your kids? Your children might have to pay a lot of tax if you leave them your superannuation & insurance proceeds.

 

This can be a particular issue where you:

 

  • Are splitting your assets amongst your children – for instance, you leave the house to one child and your super to another; and/or
  • You have some children that are dependents and some that are not!

All lump-sum death benefits are tax-free if paid to a dependant (for tax purposes).

Lump-sum death benefits paid to non-dependants (for tax purposes) are taxed at 15% plus the Medicare levy (for elements taxed in the superannuation fund) or taxed at 30% plus the Medicare levy (for elements untaxed in the fund such as insurance proceeds).

This could leave a large and potentially unintended after-tax difference if it isn’t well planned for.

WHAT IS A DEPENDANT FOR TAX PURPOSES EXACTLY?

  • Your legal or de facto partner or another person with whom you are living together on a genuine domestic basis as a couple (including same-sex couples)
  • A child under 18 years (including an adopted child, stepchild, ex-nuptial child, or child of a member’s partner)
  • Any person financially dependent  on you at the date of your death
  • A person with whom you have an interdependency relationship.

WHAT IS AN INTERDEPENDENCY RELATIONSHIP? 

It is where two people (whether or not related by family):

  • Live together
  • Have a close personal relationship
  • One or each of them provides the other with financial support, and
  • One or each of them provides the other with domestic support and personal care.

An interdependency relationship can also exist where there is a close personal relationship between two people who do not satisfy all other criteria for interdependency because either or both of them suffer from a physical, intellectual or psychiatric disability.

If you want to evaluate your intentions for your superannuation and/or life insurance proceeds, Yield can help.

 

Information provided is in accordance with our disclaimer – users should ensure they read our disclaimer before continuing to use our site

“GOOD FORTUNE NEEDS GREAT PLANNING”


GENERAL DISCLAIMER:

The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions.  Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.

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About Yield - Financial Planner Melbourne

Who we serve – We help time poor professionals and business owners who intuitively know they should be doing more to improve their financial position and are seeking an expert to guide them on financial planning strategies. Our clients want personalised financial planning advice and to feel empowered and confident that they can achieve a secure transition to retirement.

What we do – We gain a deep understanding of your current financial position and preferences, what you value and want to achieve. We then help you develop a highly personalised financial plan, to show you how to make your money work harder for you. Ongoing we regularly monitor and measure progress against your plan projections, to show you how you’re tracking and help you manage change to your advantage.

How we do it – We apply our proven expertise in investment markets (Shares & Property), Tax and Debt structuring, Retirement Planning, Risk management and Estate planning, to help you reorganise the way you use your money to achieve your desired outcomes.

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