Your Super Could Cost Your Kids

If you plan to leave your superannuation to your adult children, it's important to understand how it may be taxed after you're gone. When super is paid to adult children who are not financially dependent on you, they may be required to pay tax on the taxable component of your superannuation balance. For many people, most of their super consists of taxable components because it has been built through employer contributions and concessional contributions over many years. For example, if your super balance is $500,000 and the entire balance is a taxable component, your adult children could face a tax liability of around $85,000 when they receive those benefits. Fortunately, there are strategies that may reduce the taxable component of your super before your death. These strategies are generally considered once you've reached the age where you can access your superannuation, rather than waiting until later in life. One commonly used approach is a recontribution strategy. This involves withdrawing money from your super and then recontributing it as a non-concessional contribution. By doing this, part of your super can be converted from a taxable component to a tax-free component, which may reduce or eliminate the tax your adult children would otherwise pay when they inherit your super. Estate planning doesn't just involve deciding who receives your assets. It also involves understanding how those assets will be taxed and whether there are opportunities to improve the outcome for your beneficiaries. General advice only. Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).

Disclaimer || The information provided in this post is general in nature only and does not constitute personal financial advice. Amy Lehmann is an Authorised Representative(No. 1292710) of AFSL 495401.