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Superannuation and Financial Recovery

 In addition to providing for retirement, funds properly accumulated in a regulated superannuation fund have risk management benefits if financial adversity occurs and the person needs the protection of bankruptcy. These benefits include: Without regard to the person’s age, funds properly accumulated over time in a regulated superannuation fund are protected and are not available to the bankrupt estate, and
If the person is at retirement age or otherwise legally able to access funds from the superannuation fund, once bankrupt, that person can safely receive lump sum monies from his or her superannuation fund and those funds are protected. They are not available to the bankrupt estate, and
The bankrupt person can use the lump sum monies received from the superannuation fund to protect assets that would otherwise be lost to his or her bankruptcy.
Nicholls & Co provides advice on bankruptcy and superannuation. We recommend a proactive approach as it is not something your clients want to get wrong. Our contact details are email: hello@understandingbankruptcy.com.au or phone: 1300 764 197 .

In last month\’s Practice Note: 02/11/2021 ‘Superannuation – Also a Risk Management Tool‘ we discussed how superannuation can be utilised as a risk management tool and the article generated great interest.

To assist you to be across how outcomes can be improved for clients who need the protection of bankruptcy, in this newsletter we give examples of how clients can be helped, and also real-life examples of mistakes people have made to cause devastating consequences.

FACT: Superannuation lump sum monies properly received by a bankrupt person are protected for the bankrupt person.

NOTE: This protection is only available for people who are bankrupt before they receive the lump sum.

TIP: Assets purchased during bankruptcy with protected superannuation funds are also protected where it can be demonstrated that the protected superannuation funds were used to purchase the asset.

WARNING: Superannuation funds accessed prior to bankruptcy are not protected from creditors or the bankrupt estate. It is only superannuation funds properly accessed after the person is bankrupt that is protected.

COMMENT: Use of superannuation as a risk management tool can have a profound impact on a person\’s life, health, and wellbeing.

STRATEGY: It may be in the best interest of persons who are experiencing severe financial adversity to be proactive and file for bankruptcy without undue delay. Being bankrupt will ensure the protection of the client\’s superannuation lump sum when received.

ASSISTANCE: For your clients considering bankruptcy and utilising superannuation for their financial recovery plan we strongly recommend that no decisions be made without first obtaining professional advice.

For assistance our contact details are email: hello@understandingbankruptcy.com.au or phone: 1300 764 197 .

To demonstrate the importance of obtaining advice before filing for bankruptcy or accessing superannuation funds, below are real-life stories showing actual mistakes people have made:

To demonstrate the importance of obtaining advice before filing for bankruptcy or accessing superannuation funds, below are real-life stories showing actual mistakes people have made:

Real-Life Story 1:
Mrs. B was enduring severe financial pressure, accessed her super, purchased a unit at a retirement center, and filed for bankruptcy. As the super funds were accessed prior to Mrs. B becoming bankrupt her bankruptcy trustee had no alternative but to sell the unit and pay the sale proceeds to Mrs. B’s creditors. If Mrs. B had first become bankrupt, then accessed her super by lump sum, and then purchased the retirement unit, her retirement unit would have been protected and not lost to her bankrupt estate.

Real-Life Story 2:
Mr. D was enduring severe financial pressure and accessed his superannuation as a lump sum. Long story short he subsequently became bankrupt, and the monies obtained from his superannuation fund were lost to his bankrupt estate, to be paid to his creditors. If Mr. D had first become bankrupt and then accessed his super by lump sum, the superannuation funds would have been protected and available for his retirement.

EXAMPLES OF HOW PEOPLE CAN BE HELPED
We have created examples to show how superannuation and bankruptcy can be used to assist a person who is at retirement age to get past the financial adversity being experienced and get on with life. Read these superannuation and financial recovery examples.

ASSISTANCE: For your questions on bankruptcy and the protection it provides for regulated superannuation funds, call 1300 764 197 or email: helpdesk@nichollsco.com.au
Access Past Practice Note article.

Copyright@2022 Nicholls Resources Pty Ltd. All rights reserved. Liability limited by a scheme approved under the Professional Standards Legislation.

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This newsletter is provided as general information only and is not advice. All client\’s situations are different and independent advice should always be obtained. If you have any questions on bankruptcy, you are welcome to give us a call 1300 764 197 or  hello@understandingbankruptcy.com.au.

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