STRATEGY
Guarding SMSF wealth – part one
Recent legal events in New South Wales have challenged the ability to ring fence SMSF assets in the event of a member’s death. Grant Abbott assesses these significant developments.
GRANT ABBOTT is director of I Love SMSF.
It takes a long time, good management, great ideas, insights, careful budgeting, great advisers and skills to build family wealth. For many with good advisers, wealth is housed in trusts for asset protection, as well as the taxation advantages of streaming taxable income across a family or into a bucket company. SMSFs have also done very well with more than $700 billion in assets growing from only $11 billion 25 years ago. The advantages of an SMSF are, like a trust, asset protection and a slew of taxation benefits. Yet family wealth is so vulnerable and open to attack by viruses, lawyers, agencies, regulators and government. Look no further than the Supreme Court of Western Australia case Miller v Taylor [2018] WASC 75. Here the second spouse of the deceased, Andre Taylor, contested his will under
the Family Provision Act (WA) 1972, which had provided a split of $600,000 for the two children from his first marriage. The case was commenced in 2013 and heard before Justice Jeremy Curthoys in the WA Supreme Court in 2018. Surprised to see six lawyers present at the lawyer tables, Justice Curthoys tore into them, courtesy of the $500,000 in legal fees that had been racked up decimating the estate proceeds for the benefit of the second spouse, Angela Taylor, and the two children. In the end it should come as no surprise the only winners were the lawyers. A lawyer made a will for the deceased 10 years prior to his death and then other lawyers attacked it under the Family Provision Act, “ravaging the estate”, according to Continued on next page
QUARTER II 2020
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