A technical specialist has warned accountants of the twofold compliance risk that exists in situations where they assist SMSF clients with forms for death benefit nominations.
“Not only do accountants need to be concerned about giving financial product advice, therefore needing to be licensed, but they also need to be concerned about giving legal advice, particularly when it comes to death benefit nominations,” Accurium head of education Mark Ellem noted during a practitioner webinar held today.
Ellem pointed out recognising this fact is becoming particularly acute given the increasing instances of having death benefit payments being challenged in court.
As such, he recommended accountants restrict their involvement in the process to purely educating clients about their options when contemplating estate planning strategies.
“What I would be doing [if I was an accountant in this situation] is educating and informing the clients of what their options are for dealing with their superannuation in event of their death,” he advised.
“You’d start with the rule saying you can only pay it to a dependant under superannuation law, including the executor of the estate or the legal personal representative.
“You’d need to have a look at the [SMSF trust] deed to see whether it has provisions [to make] binding death benefit nominations. You could talk about the tax consequences [resulting from] whom the death benefits are paid to.
“But when it comes to actually drafting a death benefit nomination, I’d be leaving that to a lawyer to draft.”
This position should not change regardless of the provisions included in the trust deed, he said.
“If the deed has a pro forma binding nomination in it, a mixture of deeds do, and the member decides to use that, it’s their call. I wouldn’t be filling it out for them, but again I’d be educating them [about] the issues around binding death benefit nominations, payments of death benefits out of super in general and recommending they go seek [legal advice],” he noted.
