A big part of a financial planner's role is to minimise the tax you pay as much as possible, this even includes the tax your loved ones will on the assets you leave behind when you pass away.
Who your superannuation or pension account benefits go to when you pass away will determine how these assets are treated tax-wise.
For example, if the money were to go to your spouse or young children, who are considered to be your dependent beneficiaries, they would pay no tax on the whole amount.
On the other hand, if the money were to go to a non-dependent beneficiary, such as adult children who fund their own life, they will pay no tax on the tax-free component but will have 17% tax payable on the taxable* portion of the benefit.
*The taxable component may include a taxed and/or untaxed element depending on the situation. But we will focus on the taxed element only.
There are 2 main strategies used to minimise the tax payable of a non-dependent death benefit recipient.
Death may be a topic you'd rather avoid, but I'm sure you'll be much happier knowing that you can save your loved ones thousands of dollars worth in tax.
Dallas Davison, Michael Hogue and Ali Hogue.