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I am auditing a fund where the sole member has passed away. There were only two payments made out of the bank account, but because there were 2 pension accounts, this has been shown on three benefit payment statements. Does this cause an issue?
Also binding death benefit nomination has nominated LPR to receive the death benefits, but instead of being paid directly to the estate, the fund has paid these death benefits to beneficiaries who are not sis dependents, but are the executors of the estate. Would this be ok? Should I be requesting a copy of the will to ensure this is where the member intended the payments to go?
Also, the regular monthly pension withdrawals continued after the member passed - (only $1/month), but as the pension ceased at date of death, should these be treated as death benefit payments & the fund is in breach of the payment rules?
Hi Lacey
Yes the estate would pay tax on behalf of the beneficiaries if the superannuation is paid to a non-tax dependant.
Thanks
SMSF AAA
Hi Lacey
Benefit payments can be allocated across more than 1 member account.
A death benefit can be paid to a LPR by paying it to the executors of the estate. Yes you should request a copy of the will to make sure it has been distributed in accordance with the deceased's will.
You should also ensure the Fund has issued a PAYG payment summary to the executors of the estate & the estate / LPR's has / have remitted any tax owing to the ATO.
The pension payments made after death should be treated as part of the lump sum death payments made and they may mean that the Fund is technically in breach of the payment rules. If the pension payments after death are less than $30,000 and are not material then a qualified audit report / audit contravention report may not be required.
The payment rules are covered by SIS regulation 6.21 that states that a death benefit if paid as a lump sum must be paid as a single lump sum or an interim lump sum payment that is followed by a final lump sum payment.
Thanks
SMSF AAA