Assets owned by a SMSF

Hi,

A friend of mine has recently "retired" and is in the process of transferring personal assets to a SMSF to take advantage of the tax benefits of having income distributed by the SMSF rather than by personally owned assets.

I was wondering how assets owned by SMSF are treated once the owner dies, are they willable and how are they affected by capital gains tax?

Cheers

Terry

 

Another response to a very old post out of nostalgia.

Assets within an SMSF are not covered by the Will of the member(s).

The member can use a binding death benefit nomination, or a more recent strategy is to build an 'SMSF Will' or a set of rules into the SMSF which state what happens when the member dies.

If none of these options are chosen the trustee or remaining trustee will determine what happens to the assets - and this cannot be challenged via normal legal means.

If the last member of the SMSF (and hence sole trustee) dies, then the executor of the individuals estate will normally step in. The executor may decide to sell the assets and pay the proceeds to the estate so they are all divided up and distributed from the estate (and also open to being challenged).

If the deceased member was drawing a pension, there should be no CGT. If they were in accumulation phase, 10% CGT in assets held for more than 12 months.

Death benefits paid to financial dependants (spouse, child under 18 or child with a disability) will be tax free. Death benefits paid to non-financial dependants (e.g. audit children) will be taxed at 15%.

Seemingly simple question however with SMSF the answer is often more complex than what you would expect.

 

Is 15% payable by adult children for both concessional and non-concessional compoments ?

Also ....From the SMSF do benefactors receive cash only ie does all the assets have to liquidize eg shares, units or property. Or can this be written in the 'SMSF will'

thanks again

 

OK.

The tax free components within the benefit that is paid out to non-financial dependants (adult children) are tax free. Tax free components are made up of the non-concessional / undeducted contributions, co-contributions etc

The taxable components are taxed at 15%.

Death benefits can be paid in-specie if the trust deed allows it.

Hope this clarifies.

SM