Assuming that the surviving member cannot rollback any existing phase income streams or they’re in accumulation phase, they can’t receive any more than their transfer balance cap, Mr Hill said in a podcast with the SMSF Academy’s Aaron Dunn.

“What we’re going to see moving forward with many clients is some money reverting to the survivor and excess balances coming out of the fund,” Mr Hill explained.

“You’re going to need to have clients complete a binding death benefit nomination that will deal with excess balances and a reversionary pension for non-excess balances.”

This means that for some client multiple documents will need to be prepared, and there could be potential conflicts between documents if it isn’t specified which document takes priority.

SMSF practitioners may therefore want to discuss incorporating what’s called a ‘paramount document’ into the deed, which sets out which documents have priority and how benefits are to be distributed or dealt with, Mr Hill explained.

Mr Dunn said that a paramount document provides certainty as to whether the death benefit nomination or the reversionary income stream takes precedent, particularly where there may be some dispute or inconsistency.

“When push comes to shove, if you don’t have any form of definitive outcome, well then what one is going to take precedent? You may have to go back to the deed and reference what one would actually take place in that circumstance,” said Mr Dunn.