Not telling clients to marry someone older than them

OK: we don’t actually expect marital advice in an SOA. But there is a facility within super that makes a marriage to an older partner quite tax-advantaged.

That facility is the ability to split super contributions. Basically, the idea is that a married couple can split super contributions one to the other. This happens after the contribution has been made, allowing two sets of deductible super contributions to accumulate in the account of one or the other spouse. All that is required is the facilitation by the super fund manager (quite easily-achieved when the fund is a self-managed one).

Remember, super becomes accessible at age 55. It then becomes a virtually tax-free investment (and one still available for withdrawal), once the member turns 60. This means that a couple can minimise their tax and maximise the accessibility of their super when they accumulate their contributions in the account of the older spouse. If the couple are of similar age, the benefit is not that great. But wherever there is a significant age gap (which might be no more than two years for clients who are actually approaching 55), serious consideration should be given to the clients splitting contributions from the younger to the older spouse.

In cases where the clients’ current super funds will not co-operate with the plan to split the contributions, consideration should be given to making future contributions into a different fund that does make the transfer possible. For advisers recommending a switch from one super fund to another, the ability to transfer contributions may even be a feature that tips the comparison between the old and the new fund in favour of the new fund. (Of course, in such cases, a comparison must be made of all of the features of the two funds, with the new fund coming out on top on the basis of the entire comparison).

Interestingly, we are yet to see a user on spruiking the fact that they are over the age of 60 as a way of wooing a much younger husband or wife. But we expect it will happen soon – perhaps from one of our advisers reading this: “I am single, employed and approaching preservation age. Looking for someone in their early twenties with a view to marriage.”

The Dover Group