Jill who is 42 years of age, and her husband Jack who is 45 years of age, have been members of a superannuation fund for many years. They have two children under 18 years of age. The superannuation fund provides insurance on the permanent disablement of a member and a lump sum equal to the proceeds of an insurance policy held on the members life. Tragically Jack is killed in a road accident. The superannuation fund permits death benefits to be paid wholly as a lump sum, a pension or a combination of each.

Required:

Provide your advice to Jill about the advantages and the disadvantages of her taking a lump sum and/or a pension and the tax consequences of what you recommend to her.

Answer rating: 100% (QA)

Advantages of a Lump Sum fast access to funds Choosing a lump sum payment would provide Jill fast access to a big sum of money which could be advantag... View the full answer