Masterclass SMSF – How super death benefit nominations work and how binding applies

Masterclass SMSF – How super death benefit nominations work and how binding applies

SMSF – How super death benefit nominations work and how binding applies

When an SMSF member has died, your super (applies whether in commercial fund or SMSF), is NOT controlled by your WILL. It is controlled by a nomination and the surviving SMSF trustees must comply with the applicable super and tax laws for paying out death benefits. A death benefit payment is generally made by the SMSF to another person after the death of a member of the fund.

For a dependant of the deceased, the death benefit can be paid as either a lump sum or income stream. Income streams (super pension) are usually either a new income stream that is paid to a dependant, or a reversionary income stream that is the continuation of an existing income stream and paid to a dependant.

For those not a dependant of the deceased the death benefit must be paid as a lump sum.

You can nominate the beneficiary for your super with your super fund (a death benefit nomination) instead of leaving the trustees to decide. If you have NOT nominated a beneficiary then the estate can access your super and distribute it (now as part of your estate), according to the instructions in your will. Note a will does not control your super directly – super is outside your estate, and is BEST controlled by death benefit nominations or agreements.

A death benefit nomination is a statement by a member of a super fund to the trustees of the super fund directing them on how to deal with their super account when they die. A death benefit nomination is supplied to the trustee of the SMSF by the member requesting the fund pay their benefits to a nominated beneficiary/ies. It is either:

  • binding – it directs the trustees to pay the member’s death benefit to a legal personal representative or dependant;
  • non-binding – it notifies the trustees of the member’s preferred beneficiaries, leaving the trustees to make the final decision.

Super law does not require an SMSF member to have a death benefit nomination to pay out death benefits. But, if an SMSF does have one, it will need to first follow the rules of the SMSF’s trust deed (the deed must allow them) and the rules of super law. For more refer to the ATO site HERE as well as – SMSFD 2008/3: Binding death nominations

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assists you to find the right expert to answer your question – it’s FREE also!

No obligation. 0407 361 596, Paul.

Also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

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About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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