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Superannuation and Income Testing - Transfer of funds now



Our most recent development in asset protection is our Kiwi Saver Scheme. Those who save through it will at least have some secure savings to look forward to, when they are old and our Government  has run out of funds to support pensioners adequately in old age. It is interesting to note that the present Government is making some progress towards establishing a general superannuation saving.

What if those accumulated funds are going to be income and asset tested?

The Writer believes it is extremely likely that such testing will take place. It is therefore important to take any entitlements out of the scheme at the moment when superannuation recipients turn eligible for a pension. They should then transfer their entitlements into the safety of their Family Trust or spend those monies.

Our justification - Governments change from time to time as we know, and the Government which has set up the Superannuation savings scheme, believed it had a responsibility to the lower income earners in our society, and surely not towards Asset Owners. If that philosophy returns, then it will result in the loss of a person's superannuation savings, when income and asset testing is applied to it. 

 It really depends on what method is chosen by the Government of the day, which then administers our dwindling Superannuation assets for future Older Adults. Placing your Savings in a Family Trust, which already has your other assets contained in it, must surely be to your advantage.

Incidentally, this also applies to any Super Funds of a private nature. You will undoubtedly be income and asset tested on those  funds in the future, unless you have had the foresight to transfer those funds into your Trust, and to have completed, or at least vastly reduced, the debt owing to you through Forgiveness and Debt repayment.

It is interesting to note that some Superannuation Funds allow a direct transfer into a Family Trust, whilst other Funds will only transfer the entitlement to the Trustees personally.  To then maintain that a transfer to a Family Trust is not possible. is incorrect.   Any Super Fund can be transferred to a Family Trust by means of a special legal construction called a "Chose in Action".  Trustees must ensure that  any changes to the trusteeship of a Family Trust are recorded and notified to the Superannuation Funds  concerned.  This will ensure a smooth payment at the time when the funds mature.

At Sanctuary TrustLaw we do a regular review of all  our Family Trusts with Superannuation Funds in them, and notify our clients when they have made trusteeship changes, to ensure that this aspect is up to date. This is done as part of our yearly review and incurs no additional cost to our clients.



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