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Our latest poll revealed that 73% of you feel better off than your parents when it comes to money and lifestyle. Whether you’re in the majority, or not, what should you be doing as a SASS member to protect your wealth and your loved ones?
This month we cover wills, how to have tough money conversations, and getting your financial affairs in order before it’s too late.
Arranging a will is an important part of having your finances in order. But according to a 2018 Finder survey of 2,000+ Australians, more than half of us don’t have one, mainly because we just haven’t got around to it. If you’ve been putting it off, it’s worth knowing just what happens if you die intestate – without a will.
A will is a legal document stating how you want your estate assets – such as property and possessions, cash and investments – to be distributed when you die. If you don’t have a will, assets will be passed on to family members according to the intestacy laws for your state or territory. These laws follow a formula for who gets what, so your assets may not end up with the person or people you have in mind.
Your SASS benefit, and any other super you may have, are ‘non-estate’ assets and therefore won’t automatically be included in your will. Some super funds allow you to make a nomination for who should receive your assets if you die, but such nomination doesn’t exist for the SASS scheme. Once you die, your assets will pass to your spouse or de facto partner through a death benefit which is in most cases, paid as a lump sum.
If you don’t have a spouse or de facto partner, your benefit will be transferred to your estate, which is why it’s crucial to have an up-to-date will in place. If you’d prefer to pass these assets to someone else when you die, it’s vital to think carefully about options for your super, especially as you near retirement. As you exit SASS, unless you have a lifetime pension option, you’ll choose whether to have your benefit rolled over to another fund where you can choose to commence an account-based pension, receive a lump sum, or do a combination of both.
Regardless of what you decide to do with your super, reviewing your will on retirement is a good idea. It gives you an opportunity to make sure new estate assets – such as savings from a lump sum payout - or super, if you have made a death benefit nomination for your estate – are accounted for.
You can see a solicitor, public, private trustee or an estate specialist through Aware Super to draw up your will and documents for your estate plan. Here are five things to think about as you get this underway:
Your will is a crucial part of your estate plan, but there are other things to consider too. For example, you may want to organise other legal documents, such as an Enduring Power of Attorney, to make sure your affairs are managed according to your wishes once you lose capacity to do this yourself. With so many things to think about, it’s always best to talk to an expert before deciding what’s right for you.
Although money is something we all need, we’re not always comfortable talking about it. Being open about money can be a way to resolve family issues big and small. As well as setting the scene for a more harmonious future, talking about finances can help you prepare for the practical tasks of transferring your assets – before or after your death.
Being open about money can be a way to resolve family issues big and small. As well as setting the scene for a more harmonious future, talking about finances can help you prepare for the practical tasks of transferring your assets – before or after your death.
By taking a patient and sensitive approach, you can have money conversations that acknowledge the feelings and concerns of family members, without being dominated by them. Depending on your life stage and circumstances, here are five topics to bring up with your family:
In a National Seniors survey , older Australians were asked what they planned to do with their money in retirement. Only 3% expect to hang on to savings for children to inherit compared with 10% planning to spend it all. If you have big plans for your retirement, be open with your kids about what this might mean for any financial legacy they’re expecting.
On the other hand, it’s also common for older Australians to help their kids out with financial gifts or loans. Research shows Australians aged 50+ have handed over $31.6 billion for home deposits and $55.9 billion for education . If a handout to your children is on the cards, be realistic about what you can afford and seek financial advice if you’re unsure. In discussing arrangements with family, be clear on whether any payments are loans or gifts. You may choose to offer money as an advance on an inheritance and account for this in your will.
Having an honest conversation about your will can be daunting. But discussing this with your family now can give them greater clarity and understanding about your choices, even if they don’t agree with them. This could save your loved ones from a great deal of confusion and conflict after your death.
Being open about your will is particularly important if you’ve had more than one partner or spouse, or have children and step-children from different relationships. Having a comprehensive estate plan prepared by an expert is essential to ensure assets are shared according to your wishes.
Losing capacity to manage your affairs can leave you vulnerable and create problems for family. Having an enduring power of attorney in place will allow your finances to be managed in your best interests by someone you trust. Aged care may not be on the immediate horizon, but don’t wait until you’re in crisis to talk about what would be best for you, your partner (if you have one) and your family.
This handy checklist takes you through the key steps to getting your finances sorted, so you – and your loved ones - can rest easy.
I’m a divorcee and have been since 2010. I would like to know whether the ‘family split’ amount has already been taken out of my account and distributed to my ex. I find the statements hard to understand. When is she entitled to her share - when I retire or when she reaches retirement age?
Once SASS is served a Court Order instructing that your superannuation interest in SASS is to be split in accordance with the Family law Act 1975, your ex-spouse is contacted so that she can provide payment instructions for her split entitlement. Once these have been provided, the base amount (adjusted for interest to the date of payment), is paid out of the scheme. At this point, the splitting order has been fully satisfied.
Once the split amount has been paid, your SASS benefit will be reduced by the amount paid to your spouse. This is done by an ‘initial reduction percentage’. The initial reduction percentage is applied to your personal account balance at the date of the split.
For employer-financed benefits, the initial reduction percentage is recorded and adjusted down while you continue contributing to the scheme and your employer-financed benefits continue to accrue. The downward adjustment ensures that any benefits that you accrue after the split are not reduced.
Your annual statement confirms when your super account was initially subject to a family law split. Your statement will also include a table that outlines how your personal account balance, and the balance of any Additional Employer Contributions (AEC), if applicable, will be reduced. You can also find this out by looking at the “Your retirement benefit” and “Your alternative benefit” sections. The “family law split” section confirms the family law reduction percentage that has been applied to your employer-financed benefits.
If you find any of the detail in your SASS statement difficult to understand, you may prefer to contact the customer service team. They will be able to talk you through each section of your statement and explain what it all means. You could also take a look at SASS Fact Sheet 14: Family Law and Superannuation Splitting to find out more.
Why can’t I nominate a beneficiary?
SASS is governed by the State Authorities Superannuation Act 1987, and all scheme benefits are paid in strict accordance with the legislation. Unfortunately, there is no provision for members to nominate a beneficiary.
In the event of your death, your benefit will be paid to your spouse or de facto partner, provided they are eligible. If claims are made by more than one eligible person, the Trustee may decide the most appropriate way to distribute your benefits. If you don’t have an eligible spouse or de factor partner when you die, your benefit will normally be paid to the personal representatives of your estate.
For more information about the SASS death benefit, you can read SASS Fact Sheet 8: Death Benefit here.
A StatePlus SASS seminar is a great way to learn how to maximise your super, meet other SASS members and speak to our very own experts about the scheme.
State Super Financial Services Australia Limited trading as StatePlus (ABN 86 003 742 756 | AFSL 238430) is wholly owned by FSS Trustee Corporation (ABN 11 118 202 672 | AFSL 293340) as trustee of the First State Superannuation Scheme (ABN 53 226 460 365). This information is of a general nature only and is not specific to your personal objectives, personal situation or needs. Before making any decisions based on this information you should consider its appropriateness to you. Every effort has been made to ensure the information is accurate. We strongly recommend that you consult a financial planner before taking action and review the relevant Product Disclosure Statement. Past performance is not an indicator of future performance and future performance is not guaranteed.
