Episode 161: Will your kids pay tax on your super?
Many Australians assume that because their superannuation is tax-free in retirement, it will also be tax-free when they leave it to their family. Unfortunately, that's not always the case. If your super is ultimately inherited by financially independent adult children, part of your balance could be subject to tax—potentially reducing their inheritance by thousands, or even hundreds of thousands, of dollars.
In this episode, Tim explains one of the most overlooked areas of retirement and estate planning. He unpacks the difference between tax dependants and non-tax dependants, explains the taxable and tax-free components within your super, and shares practical strategies that may help minimise future tax for your family.
In this episode you'll learn:
-Why super can still be taxed after your death
-Who is considered a tax dependant for super purposes
-Why adult children often pay tax on inherited super
-The difference between taxable and tax-free components
-How to find your tax components on your annual statement or online portal
-How a recontribution strategy can increase the tax-free component of your super
-Other strategies that may help reduce future tax, including withdrawing funds before death in appropriate circumstances
-Why estate planning should include your superannuation—not just your Will
The best place to start is simple: log in to your super fund and check the taxable and tax-free components of your account. Understanding how your super is structured today can make a significant difference to the legacy you leave tomorrow.
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