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Applicable only to a SMSF, a Death Benefit Rule is, effectively, a rule written into the trust deed by the trustee at the request of a member. That rule sets out the conditions regarding the payment of the member’s benefits after their death.

Similar to a Binding Death Benefit Nomination, the most significant difference is that a Death Benefit Rule is ‘hard wired’ by the trustee into the trust deed, following a written request from a member. The trust deed of the SMSF must either:

  • permit the trustee to establish a Death Benefit Rule; or
  • be amended to include permission to establish a Death Benefit Rule.

A comparison of both Death Benefit Rules and Binding Death Benefit Nominations shows positives and negatives of each, which will differ according to personal circumstances.

To establish a Death Benefit Rule, a member must write to the trustee, setting out the proposed rule or rules which the member wishes to be included in the trust deed of the SMSF, and requests the trustee to accept the rule.

The requested rule could include requirements that the benefits be paid as a lump sum or as a pension, with stipulation as to the terms and conditions of the pension.

Whether or not to establish a Death Benefit Rule is a decision for the trustee. If the trustee consents to accept the rule, the rule effectively forms part of the governing rules of the SMSF, under which the trustee must operate in administering the fund, and is therefore binding on the trustee.

A Death Benefit Rule is ‘hard wired’ into the trust deed of the Fund by either:

  • a separate document, which forms part of the overall governing rules of the SMSF; or
  • amending the actual governing rules to include the specific rules in the updated document.

In the event of the latter occurring, the Topdocs SMSF Trust Deed contains provisions directing that the rule, or rules, cannot be removed by a later variation without the consent of all members of the fund.


The current Topdocs SMSF Trust Deed empowers the trustee to accept a request from a member to write a Death Benefit Rule, and to amend the deed by writing the rule.

As well as empowering members to complete complex Binding Death Benefit Nominations or institute Death Benefit Rules, the Topdocs SMSF Trust Deed, contains a clause providing for the order of application of relevant documents, including Death Benefit Rules, Automatic Pension Reversionary Nominations and Binding Death Benefit Nominations, and also empowers the appointment of a Death Benefit Guardian.


For more information about the Death Benefit Rule, please contact the team at Topdocs on 1300 659 242.