Superannuation can be confusing at the best of times for the average Australian. However, for those experiencing the effects of mental impairment (such as dementia), or living with those affected by it, access to their superannuation can become a financial issue of great magnitude.
Dementia is not a specific disease, but rather a term that describes symptoms associated with more than 100 different diseases characterised by the impairment of brain function. The most common type of dementia that is often encountered is Alzheimer’s disease.
It occurs more frequently in the elder demographic than in the younger population but is indiscriminate in who it affects. However, with an increasing number of people looking at accessing their superannuation, and a rise in the number of Australians impacted by Alzheimer’s disease or other forms of dementia, it’s best to be prepared with the knowledge of what you must do.
When it comes to your superannuation, if your circumstances mark you as an eligible applicant, you may be able to claim a lump sum from your superannuation fund’s total and permanent disability (TPD) insurance.
You may be under the assumption that to access the benefits from TPD, you need to have suffered an accident, a workplace injury or a critical terminal illness. However, you can claim for TPD and monthly income protection benefits from your super fund if you have any type of long-term illness that affects your ability to do your job (including young-onset Alzheimer’s or dementia).
You should get total and permanent disablement from your life insurance provider for a broad range of early-onset Alzheimer’s disease or dementia-related symptoms, including significant permanent impairment, loss of independence, cognitive decline, and other mental health effects.
Your life insurance provider will consider several factors when deciding whether you’re eligible to make a claim, including:
• Whether your claim can be supported by a doctor or medical specialist.
• Whether you’re receiving any treatment for dementia or Alzheimer’s disease, and the frequency of this treatment.
• Whether your early-onset Alzheimer’s disease can be considered permanent.
• How your capacity to work has been impaired or will be impaired by your symptoms as your disease progresses.
• Whether you may be able to take on an adjusted job role or work in a new career.
If you successfully claim TPD insurance for early-onset Alzheimer’s or dementia, you should be given early access to your super. This money will be paid in a lump sum and will cover your day-to-day costs for the rest of your life. The amount of money you receive will depend on your specific circumstances
What About If An SMSF Trustee Is Affected By Dementia/ Alzheimer’s?
In the case of an SMSF, legally, the loss of mental capacity for a trustee of an SMSF means that they can no longer make decisions as a trustee of the fund. The critical period for an SMSF is the time prior to diagnosis when the trustee may be making or not making decisions that would be in the best interest of the members of the fund.
There are four options that the trustees of this SMSF have:
• They can retain the SMSF and appoint additional trustees to the fund who share trustee responsibility as they age (which would typically occur with adult children joining the fund).
• The trustees of the SMSF can appoint an individual to take on trustee responsibility on his behalf under an enduring power of attorney.
• The trustees of the SMSF can close the SMSF and rollover the fund to a public offer fund, with all ongoing administration and compliance of the fund reverting to a third-party trustee.
• The SMSF trustee can convert the fund into a Small APRA Fund (SAF). A SAF offers the flexibility of an SMSF, without trustee responsibilities as an independent trustee is appointed to manage the trustee responsibilities on an individual fund basis and on an agreed fee basis.
It is most important to remember that if you have not appointed someone as your enduring power of attorney and you do lose mental capacity, then it is too late and you will need to apply to the court. It is always important to seek advice about appointing someone as your enduring power of attorney.