The last 10 years have seen a proliferation of the establishment of self-managed superannuation funds (SMSF’s).
In our experience many people set up a SMSF without considering the ramifications of what may happen to assets left in the SMSF in the event of the Member’s death.
It is not well-known or understood that on a Member’s death their superannuation benefits do not automatically form part of their estate. Nor can they be given away by a person’s Will.
A Superannuation Fund Trust Deed will normally allow the Trustee of the fund a fairly broad discretion.
Legislation requires that the benefits be paid either to dependants (defined as including the person’s spouse, any child and any person with whom the deceased Member had an interdependency relationship) or to the Member’s legal personal representative.
Most Superannuation Fund Trust Deeds require the Trustee to take into account the Member’s beneficiary nomination. A beneficiary nomination can be made in a way that is binding or non-binding. If there is a binding death benefit nomination in place then the Trustee does not have discretion and must follow the nomination. If the nomination is not valid then the Trustee’s discretion may determine how the benefit is paid.
Any person setting up a SMSF should ensure that they put in place a valid death benefit nomination. It is also prudent to make sure you review the death benefit nomination at regular intervals, to make sure that the nomination continues to reflect your wishes.
If you have set up an SMSF and have not put in place a death benefit nomination then we recommend you contact our office to undertake a review of your SMSF Trust Deed and prepare an appropriate nomination.
