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I have a fund to audit.
2021 and 2022 audit. Two trustees, husband and wife. Wife died in April 2021.
There is a Will with probate and husband is the only beneficiary.
It is a compulsory cashing requirement and must be cashed as soon a practicable after the member has died.
What are the documents an auditor should verify to make sure that the benefit is paid to the right person?
Hi Noble
Thanks, there are a number of issues when a member dies.
The first issue is what is the trustee structure going forward. If the husband is the remaining individual trustee he will have to have another individual trustee appointed or set up a company to act as trustee of the Fund.
In relation to the payments of death benefits the first step is if the deceased member was in pension mode then is the pension a reversionary pension. You will need to review the pension set up minutes.
If not in pension mode you will need to see if there was a valid death benefit nomination in place.
If there is no valid binding death benefit nomination in place it will be up to the trustee(s) of the Fund to decide who the death benefit is paid to.
A superannuation death benefit can only be paid to a dependent beneficiary (as defined in SIS) or to the deceased person's estate.
The SIS regulations state:
SIS Reg 6.21:
Members benefits to be cashed as soon as practicable after member dies. The ATO expect this to occur within 6 months of death.
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.
Thanks
SMSF AAA