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HLB Mann Judd urges 'de-facto duty' review
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| Michael Hutton
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HLB Mann Judd urges a review of life insurance held in superannuation, particularly the so-called ‘de-facto duty’ levied on payouts to non-dependents.
Head of wealth management Michael Hutton said not enough consideration is given to tax implications when fund members retire.
“When a member was working, there may have been tax advantages in holding life insurance in the fund,” said Hutton.
“But there can be disadvantages to keeping it in the fund after retirement — such as payouts being taxable in the hands of non-dependants.”
Hutton said regular reviews of superannuation are important in determining whether someone is over-insured. It may be that some insurance should be cancelled, particularly if there is still a major item of debt that may affect a surviving spouse, such as a mortgage.
Hutton said financial advisers should play a key role in working with clients to review their superannuation policies.
“Financial planners should make clients aware of the tax payable on payouts as part of a regular financial plan, particularly those in a de facto relationship,” he said.
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