The use of specific procedures, such as a conditional pension and the appointment of a fund member’s guardian, can help ensure death benefits are distributed as per the wishes of a deceased SMSF member, according to a recognised industry lawyer.
“The trust deed can make an allowance to establish a conditional pension,” Glenister and Co SMSF specialist adviser Ian Glenister said during his presentation at the 2013 Institute of Public Accountants National Congress on the Gold Coast.
“The conditional pension can then specify a remaining member in the fund, such as a spouse, can obtain an income stream from the deceased member’s accumulated interest in super under the detailed terms and conditions.
“What we’re dealing with is a trust and I think the vast majority of advisers in this space forget that’s what we’re dealing with.
“We’re dealing with trust law and there is no reason why the trust deed cannot make provision for how benefits can be paid.”
In scenarios involving blended families, trustees could appoint a fund member’s guardian to ensure the conditional pension was properly implemented, he said.
He said that would apply to situations where a corporate trustee had been established.
“The beneficiary, say the deceased member’s spouse, is subject to the conditional pension. The fund member’s guardian must adhere to and consent to the payment of the conditional pension,” he said.
“The fund member guardian cannot stop the payment because he or she doesn’t like the beneficiary.
“So long as the payment to the beneficiary is subject to the conditional pension terms in accordance to the provisions of the trust deed, the beneficiary will continue to receive an income stream as per those instructions.”
