Recent family disputes over superannuation death benefits carry an important warning to current SMSF trustees.
The disputes have highlighted the need for trustees to have appropriate and binding death-benefit directions planned while members are still alive, in order to reduce the risk of a dispute arising. When there are clear death-benefit directions, surviving trustees have no choice but to comply with them.
Small business owners who use a self-managed super fund can be particularly vulnerable to these types of disputes, especially those involved in a family business. This is because many small business owners hold their family business premises in their family self-managed fund, and any dispute over death benefits can lead to the forced sale of the small business premise.
To avoid the possibility of disputes arising over superannuation death-benefits in a small businesses, owners should nominate a successor trustee or successor director. This can help assure the right ownership and control of their assets is passed on to their intended superannuation beneficiaries.
Owners should also openly discuss with their family what they intend to do with their super death benefits. Establishing strong personal relationships within the family is one of the best ways to avoid a family dispute in the future.