Under most SMSF terms, the trustee can pay death benefits to any of the dependants of the member the trustee chooses (unless a binding nomination is made or the benefits will continue to be made to a dependant under a reversionary pension).

Family of the member may miss out on death benefits depending on who succeeds the deceased member as trustee.

We offer this (optional) failsafe in our trust deed template so that, where death benefits are not paid pursuant to a binding nomination or under a reversionary pension:

• (at least) 80% of the benefits of a deceased member must go to a surviving longstanding spouse; or
• if the longstanding spouse does not survive the deceased member by thirty days, the children of the member in equal shares per stirpes.

This failsafe can be removed from the trust deed so that the trustee may pay death benefits to dependants the trustee chooses in its discretion after taking into account but not being bound by non-binding nominations (if any).

DISQUALIFIED PERSONS

No member can be a disqualified person. Examples of disqualifed persons are undischarged bankrupts or someone who has been convicted of an offence relating to dishonesty. For more information see this explanation of a SMSF disqualified person.

AUSTRALIAN RESIDENTS

If all members are not ordinarily resident in Australia then the SMSF may not qualify for concessional Australian tax status. If you have any doubts about the residency of any of the participants in the SMSF please note the issue in the below comments.