“I’ve seen binding death benefit nominations that only cover the pension account in the fund because the person thought they were going to continue to draw pensions forever so they just mentioned the pensions,” Mr Colley said.

With some SMSF trustees now moving money into accumulation phase, however, they need to think about the binding death benefit nomination because it may catch them out if money has gone over to accumulation phase.

If it isn’t covered in the BDBN, it will depend on what the trust deed says, Mr Colley said.

“In most cases, the trustees after the death of the individual would look after the distribution of that amount, so it really comes back to the trust deed and what the instructions of the deed say,” he said.

“That’s probably a little bit of a trap there. People are probably not thinking as wide as they could.”