Is Your Superannuation Safe from Creditors During Bankruptcy?

Worried about your superannuation and bankruptcy filing? Your superannuation can be safe when you are filing for a bankruptcy although that is not always the case. When you declare bankruptcy, your property will be vested in the trustee for your bankruptcy. Also, any newly acquired properties will also vest with the trustee as soon as these are acquired and the property can be divided up amongst your creditors.

Superannuation is a protected asset in bankruptcy if your superannuation fund has elected to be regulated under the section 19 of the Superannuation Industry Act 1993. Also, the sections 128B, 128Cas well as 139ZU of Bankruptcy Act do not allow the trustee to make recoveries from your superannuation contributions.

When planning for your superannuation in bankruptcy, make sure that the purpose of this is well-documented. This will reduce the risk of the purpose of the superannuation contributions that you are making being misconstrued as designed to hinder, delay or prevent your transferred property from being divided amongst your creditors. If it is determined that the purpose is a dishonest one and simply a strategy that you have designed in order to prevent a division of your property, then you are likely to come under attack from the trustee in bankruptcy. Check at Debt Mediators

Additional Tips on Superannuation and Bankruptcy

  • Ensure that you are a member of a superannuation fund that is regulated.
  • Have a pattern of superannuation contributions that is both concessional and non-concessional. This is especially important at a time after you have gotten a large sum of money such as an inheritance.
  • Make sure that you have maximized on the concessional contributions. This will reduce a number of assets which are exposed to claims by your creditors. At the same time, it will enable you to maximize your tax benefits. The limits of contribution generally vary depending on factors such as age as well as the amount of money that you have in your super. It is, therefore, imperative that you do your homework well and if possible, get professional help on the questions of superannuation and bankruptcy. For persons that are aged below 60, there is generally an annual cap of $25,000 while the annual cap for the persons that are aged above 60 is $35,000.
  • As a strategy of maximizing your superannuation member balance for the retirement, it is advisable to make non-concessional contributions. This will help you develop a pattern of contributions which makes sense particularly if you currently receiving lots of money or in case you are approaching your age for retirement. For non-concessional contributions, there is an annual cap of $150,000. However, if you are below the age of 65, you can make contributions of up to $450,000 if you bring forward contributions for two years.

It is generally advisable to seek counsel from an experienced accountant or lawyer on matters superannuation and bankruptcy related so that you can take the best course of action. Look for someone who is also highly experienced in handling these matters as superannuation is generally an effective means that can be used in order to minimize the number of your assets which can be exposed to claims by creditors.

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