In order to ensure that the right assets go to the right beneficiaries, you need to sort out your estate plans regardless of the size of your superannuation benefits. You will need to get holistic estate planning advice and have arrangements in place to review your estate plans regularly.
The rules of your SMSF trust deed cover the payment of your superannuation death benefits and do not automatically form part of your Estate for distribution in accordance with the terms of your Will.
As trustee of your own SMSF, you will need to make sure that you have read and understood your SMSF’s trust deed and that you comply with it at all times.
First and foremost, you need to understand your options.
- Option 1 – Rely on the SMSF trustee’s wide discretion to determine who, within the operation of the law, will receive your death benefit and how much each beneficiary will receive.
- Option 2 – To remove the trustee’s discretion giving you greater control in deciding how your superannuation death benefits will be cashed.
Choosing option two will be beneficial, if
- You want certainty over your estate plan.
- You have a blended family and want all family members to benefit from your superannuation on your death.
- It is anticipated that there will be conflict amongst your potential beneficiaries.
- It is a possibility that there may be conflict amongst the remaining trustees of your SMSF upon your death.
- There is a risk that those controlling the SMSF post your death may not cash your death benefits in accordance with your preferences.
Subject to the specific terms of your SMSF trust deed, ways in which you could consider removal of trustee discretion include:
- Having a valid and current binding death benefit nomination (BDBN) in place.
- Specifying in your SMSF trust deed how death benefits will be distributed; or
- Nominating a reversionary beneficiary to whom your pension will automatically revert to on your death.
Source: SMSF Association
