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Sep 28, 2023

Death Benefit Payments

in SMSF Technical Forum

Member 54 years of age passwed away, life insurance policy paid around $3.2 million.

Surviving member (age 52 years ) started taking amounts for death benefits since and taken out entire amount in same financial year entire $3.2 million in more than 10 payments.

My question is Death Benefit Income Stream payment is of over $3 million, and TBC is $1.7m.

For the best outcome, is the Death benefit income stream set up, once the minimum pension is paid, can the remaining withdrawals be treated as slump sum, so that surviving member's TBC can be below the $1.7mil cap ?

Is ther better way to do this ?

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Oct 01, 2023

Hi SP

Given the $ and issues involved the trustee should get professional advice.

I assumme the surviving member is the spouse of the deceased and is entitled to receive the superannuation as a death benefit.

Yes a spouse can receive a death benefit as a pension and or lump sum payments under SIS regulation 6.21(2) - (3). If the lump sum payments are more than 2 payments this would technically be a breach of this regulation.

Thanks

The Auditors Institute