News

Documentation, Succession Planning

Care needed over LPR timing

LPR appointment timing

The length of time it takes to commence death benefit payments can impact the appointment of a legal personal representative.

SMSF trustees making an appointment of a legal personal representative (LPR) upon the death of a fund member must be mindful of the length of time a person acting in that capacity can be retained as defined by superannuation law, a technical specialist has said.

“[In these situations] the LPR is appointed from the date of death up until the death benefit commences to be paid,” SuperGuardian education manager Tim Miller said during his firm’s most recent technical webinar.

“We know that from a lump sum point of view that you can pay an interim [amount] and then a final death benefit. So [in] the circumstances where someone is appointed and you pay out a nominal [death benefit] amount, maybe to help with funeral expenses or do something else like that, well that’s when the death benefit has commenced to be paid.

“Now that means the LPR has to be removed from that point in time or in theory, from a legislative point of view, should be removed from that point in time.

“So it can be problematic and all of these sorts of issues are things that we need to be considerate of.”

According to Miller, trustees, and the individuals they appoint to be an LPR upon the death of an SMSF member, can also find themselves in situations where the LPR has to hold that position for a longer period of time than originally expected.

“If it is questionable how the death benefit is going to be paid, that period could extend out for a significant period of time,” he noted.

He revealed during his time in the industry he had seen cases where it took many years before a death benefit was finally paid out.

“[In this situation] you’ve got the LPR appointment up for a long period,” he noted.

Copyright © SMS Magazine 2021

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital