When a member passes away, it is the role of the surviving Trustees to determine who should receive the member’s super benefit and in what form.
One of the first steps is to determine whether there are any valid Binding Death Nominations or Automatically Reversionary Pensions in force at the time of death.
A problem may arise where a member has both documents in place with different dependents named.
So which takes precedence?
A good start may be to review the deed for any guidance as to which takes precedence.
There is currently no binding advice available from the ATO, but they have indicated in a non-binding meeting of a 2010 super subcommittee that the auto-reversionary pension should take precedence as the Trustee usually does not have discretion to do anything other than automatically pay the reversionary pension.
Certainly this is still a grey area and will come down to the facts of a particular situation.
What should you consider?
- Ensure your client regularly reviews their estate planning for any inconsistencies in key documents.
- Review the trust deed at the same time to check it is consistent and complements BDNs and pension documents.
- Importantly – Have a register of key SMSF documents. It is common for key documents to be missing at the time they are needed most.
If you would like to discuss a specific client situation or have a general question please do not hesitate to contact TriSuper Auditors.