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In response to Productivity Commission's suggestions, super funds have made it clear that the practicalities of such rearrangements are far from simple. One major entity in the superannuation space, the Association of Superannuation Funds of Australia (ASFA), has voiced concerns, highlighting administrative hurdles and the potential for increased responsibilities for trustees.
The complexities extend beyond mere administration. ASFA noted that trustees would be tasked with ensuring the charity's legitimate status at the time of the payment. Moreover, complicating the matter are stringent Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) requirements, demanding diligent verification processes.
Such a shift is not just a matter of administrative red tape. ASFA points out that there would be a consequential legal dimension to consider. Binding death nominations to charities could entangle superannuation trustees in legal challenges often involving dependants or contestants of the deceased's estate.
Disputes may especially arise when the member's nomination seems to contradict other family or estate plans. This could include contentious judgments on a member's capacity to make a binding nomination or instances where dependants are omitted. Not only would this introduce delay in benefit distributions, but it could also embroil the Australian Financial Complaints Authority (AFCA) in escalated conflicts.
The ripple effects are clear. ASFA is of the view that a decision to ease the pathway for charity designations in super death benefits carries risks that trustees of superannuation funds would face additional legal peril. This could escalate to situations where obtaining legal counsel and managing disputes become a significant source of expense.
Revising guidelines to facilitate charitable bequests from superannuation funds is evidently hindered by considerable obstacles. The potential for additional layers of complexity, verification, and legal vulnerability indicates a need for deliberate analysis before any structural changes can be validated.
Published:Friday, 1st Mar 2024
Source: Paige Estritori
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