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Tax-effective Estate Planning Part II

November 09, 2017

We spoke with a new client about a Will this week.

She wants to leave her super fund proceeds to her sister, but that would result in a significant amount of tax being paid to the government, because the sister is not a dependant for superannuation purposes.

So, instead, she:

(a) is going to give the superannuation proceeds to her partner of twelve years, via a binding death benefit nomination, because he is a dependant for superannuation purposes; and
(b) has made the gifts to him in the Will conditional upon him giving that same amount to the sister by way of a gift, which has no adverse tax consequences.

If her partner does not give that money, his gifts are reduced by that amount and the sister gets a gift of the same amount under the Will.

Sure, it is a little convoluted, but it saves about $20,000 in tax with a three-line paragraph.

For tax-effective estate planning, see Michael Paterson & Associates.

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