Now that legislation requires trustees / members to consider the holding of life insurance on behalf of members within the fund, what are the disadvantages.
- The fund deed must allow the process and various different administrative aspects.
- There are no restrictions who can receive death benefits from a self managed superannuation fund.
- More documentation is required than normal and if the client has no SMSF, then the fund would need to be set up with considerable more documentation and expense.
- Preservation issues can apply for example , accessing proceeds from super arising from “own occupation’ TPD.
- Access to proceeds once paid is restricted by the superannuation law.
- Some benefeciaries will pay tax on what they receive from the super fund.
REMEMBER, the above are issues that auditors focus on when it comes to the audit of a SMSF. Our audits for funds start from $300 and follow a comprehensive audit plan.
DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.