“ASIC information sheet 274 recommends that when you're recommending a client set up an SMSF, you have to talk to them about an exit strategy as well,” Cullen said.

“You have to think about how that process will work depending on what may be happening [at the time] such as a divorce, business partners falling out, loss of capacity and death. That information sheet also tells you that you have to talk to your client about the trustee structure, whether you go corporate. Remember, as an adviser you are offering choices and if the client doesn’t take it at least file it so you can protect yourself later on.”

He continued that a common strategy over the past few years has been for a member to take their money out of super through a deathbed withdrawal, but he warned there are consequences to this if it is not done correctly.

“There are a couple of things to think about with [this kind of request]. The first is who is making that decision and what I mean by that is, if you've got a client who's on their deathbed, is it the client who's requesting that the benefits be paid, or is it potentially their attorney being the power of attorney or legal personal representative,” he said.

“If your client lacks the capacity to make that request, then you also need to think about who the fund trustees are. Members equal trustees and vice versa, so if the member lacks capacity, you have to consider whether they are still being recorded as the trustee of the fund, and if they are, do you need to go through the process to change the trustee.”

He continued that while the member in question may put in the request for the benefits to be paid, it’s important to remember that the request has to go to the trustees, and technically the member in question is still acting in that capacity.

“The trustees have to receive it, and the trustees need to action it, and they can make that decision of whether they're going to pay out the benefits as requested, and although the enduring power of attorney may be able to act for the individual as a member, they can't act for the trustee,” Cullen said.

“They have to become the trustee to be able to make that decision, so we need to think about who's making the decisions and who's confirming when you’re accessing the money as well.”

Cullen said it is also important to consider the conditions of release, and whether the client may be able to access their benefits due to age criteria.

“We’re not just talking about clients over 65 years who have got full entitlement. What if they've got an old legacy pension or a non-commutable pension? They may not be able to take all those benefits out. What if they're between 60 and 65 and they've only started a TRIS? There's a limitation on how much they can access.”

He said it’s vital that advisers talk to clients about different strategies that may arise if considering deathbed withdrawals, as situations can change.

“I remember one particular case that involved quite a few million dollars that was all withdrawn before the client passed away, but they actually didn’t, and lived several more years after,” he said.

“They then had all this money sitting outside of super that needed to be invested, which had tax implications, as well as insurance considerations. You have to look at the bigger picture, and not look at superannuation in isolation. There should be a wider plan in place.”