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Law firm flags important time frames and steps with death benefits

scott hay bartlem ifa
By Miranda Brownlee
19 February 2023 — 1 minute read

An SMSF law firm has reminded advisers about the important time limits and trustee obligations applying when an SMSF member dies. 

In a recent online video, Cooper Grace Ward Lawyers partner Scott Hay-Bartlem said when a member of an SMSF dies, there are a number of important things the trustees of the SMSF needs to deal with.

Mr Hay-Bartlem said trustees should start by looking for documents like binding death benefits and pension documents.

“They also need to look at what the trust deed says and whether there are any other instructions or limits in how to deal with the death benefit,” he said.

“We also need to think about a range of other options, like what does the trust deed say and do we have to deal with the trusteeship because a deceased member is normally a deceased trustee or director of a trustee company and we need to fix those things up as well.”

Mr Hay-Bartlem said there are also important time limits in regard to dealing with the death benefit.

“We have to deal with the death benefit as soon as reasonably practical, particularly if we’re in pension phase because there’s a range of tax issues if we hold onto that for too long.”

The timing is going to depend on what the assets of the fund are, what the situation is, how many people need to be dealt with and whether we have any binding documents to try and work through, he said.

“We also have six months to deal with the trusteeship or the directorship of the trustee company. So, we need to be conscious of taking steps to move all that through.”

One of the big areas for death benefit disputes at the moment, he warned, is where beneficiaries claim the trustee has done the wrong thing and should have considered them when distributing the death benefit.

“So, it is really important that where we’re worried that might happen, we actually work through the right process because the courts have talked about what trustees should do and shouldn’t do to pull the death benefit payment rules together without getting in trouble.”

He also reminded SMSF professionals and trustees that when someone in a super fund dies, the trustee can’t just leave superannuation sitting in the fund.

“It is a situation where the trustee’s got to make a decision to pay the money out of the fund. So, it’s not just enough to wait and see what happens or to put it off. We need to take steps to pull the death benefit together.”

Cooper Grace Ward Lawyers will be presenting on the topic of death benefits at its Annual Adviser Conference in March.

Law firm flags important time frames and steps with death benefits
scott hay bartlem ifa
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Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: miranda.brownlee@momentummedia.com.au

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