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Hello,
A Superannuation Fund had a member that passed away and the member had not provided the fund with either a binding or non binding nomination.
The surviving spouse (being the sole Director of the corporate trustee) has paid out the benefits as a death benefit lump sum to herself.
In regards to this:
- 7 payments were made, so a breach of SISR 6.21(2) has occurred, is this a reportable breach under SISR 6.17?
- To reduce our exposure in case a beneficiary appears, do we qualify Part A of the Audit Report stating that the surviving spouse in her role as sole director of the corporate trustee paid out the Superannuation Fund to herself and we have not been provided evidence that other beneficiaries may exist?
Thanks,
Brenton
Thanks all.
Hi Brian
I agree the BDBN would be definitive if it is valid.
If there was no valid BDBN then the trustee could consider the will.
Thanks
SMSF AAA
My understanding is the decision as to the disposition of a death benefit resides with the Trustee of the super fund. Where there is a valid BDBN accepted by the Trustee then that is decisive. The super payment is not directed by the Will so I disagree with the idea that the auditor is required to review the Will.
I think you need to ask for a copy of the will, which may override any binding death nomination. I always ask for a copy of the will when performing the audit in these circumstances. I believe it's a requirement to do so.
Thank you for your response.
Hi Brenton
I agree as the death benefits were not paid as a single lump sum or as an interim lump sum & a final lump sum then it is a breach of Reg 6.21(2). My view is yes this is technically a reportable breach under Reg 6.17 assuming it meets the criteria (eg. breaches are greater than $30,000).
An extract of Reg 6.21(2) is:
"The form in which benefits may be cashed under this regulation is any one or more of the following forms:
(a) in respect of each person to whom benefits are cashed: (i) a single lump sum; or (ii) an interim lump sum (not exceeding the amount of the benefits ascertained at the date of the event mentioned in subregulation (1)) and a final lump sum (not exceeding the balance of the benefits as finally ascertained in relation to the event);"
In relation to the payment of the death benefit to herself (as a surviving spouse) my view is that you should not have to qualify Part A of the audit report as you have noted. The reason for this is that if there is no written death benefit nomination in place a Fund's trust deed normally allows the trustee to pay at their discretion a death benefit to a dependent or legal personal representative. The Fund's trust deed should be referred to see if the trustee has met their obligations in paying out the death benefit.
Thanks
SMSF AAA