What happens on the death of a member receiving a TRIS?

On the death of a member receiving a TRIS, if there is no reversionary beneficiary nomination, any remaining amount in the pension account for the TRIS (as well as any other benefits of the deceased member in the SMSF) may then be paid by the trustee of the SMSF in accordance with the SMSF’s trust deed, either to one or more dependants of the deceased member, and/or to the estate of the deceased member, to be dealt with according to their Will.

‘Dependants’ include a spouse (including de facto partners and same sex partners), children, and any other person that was financially dependent on the pensioner at the time of death or any person who was in an ‘interdependency relationship’ as defined in the superannuation legislation with the pensioner.

A pensioner can make a binding death benefit nomination (BDBN) (provided that the trust deed for the fund allows for BDBNs to be prepared) during their lifetime and bind the trustee to pay benefits according to the pensioner’s direction.  Otherwise, the decision of how to pay death benefits is by default left to the trustee’s discretion.

As stated above, if the TRIS is reversionary, it will then continue to be paid after the pensioner dies to the reversionary pensioner. A reversionary beneficiary nomination may override any current or future BDBN or non-binding death benefit nomination subject to the trust deed.