Have you ever wondered what would happen to your superannuation if you were to go bankrupt? In the current economic climate, it is difficult not to worry!
So, is your hard earned superannuation fund protected from creditors?
Under typical circumstances the answer is yes, but it is not always so. As you might expect, when faced with the prospect of bankruptcy most people try to hide their assets and protect them from creditors. When this extends to placing said assets into their super fund, the situation can become complicated…
When a person files for bankruptcy all their assets are handled by a trustee appointed with the sole purpose of liquidating said assets to repay creditors. As mentioned earlier, a person’s super contributions are generally not included in these assets to be liquidated, unless it can be proven that the purpose for making contributions was to ‘prevent, hinder or delay transferred property from being available for division amongst creditors’.
The purpose of specific contributions can be ascertained by reviewing the pattern of contributions to one or more eligible funds. If the transfer(s) do not match the patterns, they may be considered ‘out of character’.
To surmise, you can reduce risk to your personal assets by maximising both concessional and non-concessional superannuation contributions. Non-concessional contributions should be made in a regular and predicable manner to protect the super fund in the event of bankruptcy.
If you have any questions about insolvency and bankruptcy or would like to book a consultation, please feel free to email me at Allyson@gpla.com.au or call 07 5444 1022.
Allyson Richards