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Capacity & your SMSF

I see issues first hand so I know they exist, but the facts are these issues are more prevalent than you might expect, you need to be aware and plan for loss of capacity, because once you are in this boat, the time has run out to make arrangements.
This is YOUR responsibility, take the lead.

There are many ways to become a victim of 'lack of capacity', I want to focus on what has become a very real scenario, Dementia, especially in women.


Australian Dementia statistics

  • Dementia is the second leading cause of death of Australians contributing to 5.4% of all deaths in males and 10.6% of all deaths in females each year.

  • In 2016 dementia became the leading cause of death among Australian females.

  • Females account for 64.4% of all dementia related deaths

  • In 2018, there is an estimated 436, 366 Australians living with dementia.

  • One in 10 people over 65 have dementia.

  • Dementia is the single greatest cause of disability in older Australians (aged 65 years or older) and the third leading cause of disability burden overall.

So being aged over 65, especially a woman, we need to make sure that our affairs are in order now, so what should we focus on?


To make sure your wealth is transferred to whom you wish when you are to pass away, you need to make those decisions now whist you have capacity and take the right steps to prepare the adequate paperwork to make sure your final wishes are met.
  1. Preparing a Binding Death benefit Nomination being sure to review the terms of your SMSF Trust deed and work with a specialist to understand your taxation implications, this will ensure your SMSF balance will go where you want it to go.

  2. Complete an Advanced Health Directive (AHD) this document records your wishes now in relation to your attitude to your medical care when you no longer have the capacity to make these decisions, you can do this now by clicking here if you're in QLD. Take this to your GP to finalise. This releases any decision making burden from your Kin and also directs the Medical professionals, on your behalf, when/if the time comes. (Like keeping on/turning off life support under certain circumstances etc.)

  3. Execute a power of attorney and have you're solicitor assist you. Nominate someone who can act for you should you loose capacity. This is important for a couple of reasons; - If you don't do one and you loose capacity you are no longer able to be a member of an SMSF and your balance will need to be rolled to an external trustee to manage, such as a SunSuper etc. Troublesome issue when the SMSF will have to sell shares OR property to front up the cash to make the transfer out. - Your finances will remain in limbo until the government appoints a guardian to act on your behalf, this is a loooonnnggg process, lots of paperwork, very frustrating.

  4. Speak to your solicitor about your estate plan and understand the risks your estate may face of being challenged, especially with blended families & estranged children. Some careful planning with the involvement of your Binding Death Benefit Nomination can help assist here. Also understanding how your companies, trusts and other assets affect your estate is important.

  5. It might not hurt to leave a letter with your Will discussing why you made certain allocations. From experience, this could distinguish certain estate challenges when the beneficiaries don't understand how you have come to some of your decisions.

  6. Store all of your estate documents where your executor & attorney can find them, you can include passwords, logins, Accountant, Adviser & Solicitors details also. I have mine in a secured cloud shared with my executors & attorneys.

If you wish to start to 'capacity proof' your SMSF and personal situation, please contact us to discuss.


sighted: https://www.dementia.org.au/statistics


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