If you died with $1m of super benefits in the accumulation phase with a binding death noimination to your spouse, and the trust deed stipulates that death benefits will be paid as a lump sum, then your spouse will receive $1m in cash. Which is then difficult to get back into the super environrmt. However, if the trust deed allows for the death benefits to be retained in the fund and offers the spouse the right to choose to take it the benefits as a pension, then the benfits can be retained in the tax friendly environment.

The SMSF trust structure allows for this flexibility. There are other alternatives out there that offer this, however they do not offer you the benefit of becoming the trustee of your fund. Being trustee provides you with a lot more flexibility for managing your benefits. You do not have to set up arrangements to over ride the trustee – it is you. You therefore do not have to commit to binding nominations or reversionary pension options unless they are relevant to your circumstances.

However, with a SMSF the trustee (usually your surviving spouse) could retain the benefits within the fund, allowing for a pension to be drawn offering potentially huge future tax savings.”

In ALL cases the trustee will retain benefits within the super environment as long as the member has structured the investment in the correct manner. ie. super with a BINDING DEATH NOMINATION or pension fund with REVERSIONARY BENEFICIARY. Of course, not all fund managers offer these options and not every member structures everything correctly. The same is true for a SMSF though.