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The corporate trustees/members (husband & wife) are both 65 years old. The husband died.
Upon checking the Non lapsing Death Benefit Nomination of the husband the wife gets 100 percent.
The husband died on August 2021.
Can the wife start a pension before 30 June 2022 and put all the husband members entitlements without violating any SMSF requirements. If yes, what are the requirements aside from the Transfer balance cap.
Hi Maria
Death benefit rules are covered by SIS legislation and regulations.
In relation to a death benefit pension requirements I note:
SIS Reg 6.21 (1)
A member's benefits in a fund must be cashed as soon as practicable after the member dies.
SIS reg 6.21(2) – (3)
Benefits may be cashed by:
Single lump sum or interim lump sum & a final lump sum, or
1 or more pensions if:
Is a SIS dependent of the member, and
If child of member:
less than 18 years of age, or
Being 18 or older &:
Financially dependent & less than 25 years of age, or
Has a disability as per Disability Services Act.
SIS Section 10 – dependent is:
Spouse / child / interdependency relationship
interdependency relationship:
Close personal relationship, and
Live together, and
One provides the other with financial support, and
One provides the other with domestic support and personal care.
Re your query yes a death benefit pension can be paid to the spouse before 30/6/2022.
Issues to consider:
1) Does Trust Deed allow a death benefit pension.
2) Is the Death benefit nomination binding on the Trustee.
3) TBAR rules followed.
4) Benefit paid as soon as practicable (normally within 6 months).
5) Death benefit pension cannot be commuted & rolled back to accumulation.
6) Paperwork prepared to commence the death benefit pension.
Thanks
SMSF AAA