When it comes to death benefits – a common error seen by the ATO is where trustees confuse whether a benefit is classified as a member payment or a death benefit. This usually has to do with the timing of the event.

If a member requested an amount to be paid from their fund before they died, but died before they received it, it may be a member benefit in some limited cases. This is determined by the facts and circumstances surrounding the payment.

A trustee of a regulated super fund can only pay super benefits according to the governing rules of the fund, including the:

• fund’s trust deed
• relevant legislation.

The governing rules set out when benefits can be paid and who they can be paid to, including after a member’s death. The governing rules of the fund must be read carefully to determine a member’s benefit entitlements in the event of death.

At the time of payment, the trustee must assess whether it is a member or death benefit based on the facts known at the time, including:

• terms of the request from the member
• terms of the trust deed and any other governing rules
• knowledge at the time the payment is made (including whether they are aware that the member has died)
• the entity that the payment is being paid to
• circumstances and timing of the payment
• whether the payment is made because of and in line with the request made by the member.

For advice on specific circumstances, the executor or legal representative of a member's estate can apply for a private ruling.