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Unlock the Power of Your Superannuation
Why Does Superannuation Matter?
Your superannuation isn’t just a retirement fund – it’s a cornerstone of your financial legacy. For most Australians, superannuation represents one of their most significant assets.
Planning for the distribution of your superannuation after death should not take a back seat in estate planning discussions. Understanding what will happen to your superannuation after your passing is critical.
On your death, your super will NOT form part of your estate and will not be distributed under your Will like cash in the bank.
What Happens To Your Superannuation When You Die?
Contrary to popular belief, your superannuation (and any life insurance in your superfund) is not an estate asset and does not automatically flow to your estate upon your death. This is because your super is held in a trust by your super fund.
When you pass away, the trustee of your superannuation fund will generally decide who will receive your superannuation (called a ‘death benefit’). There are rules dictating who the trustee can give it to.
Under Australian superannuation legislation, the trustee of your superannuation fund can only pay your death benefit to certain classes of people. It might go to someone other than who you want to receive it.
According to the Australian superannuation legislation, payment of a death benefit is limited to specific categories of beneficiaries:
- Dependents, including spouses and children.
- People with whom you had a close personal relationship involving shared living arrangements and financial support.
- Your estate, managed by the executor of your will or estate administrator, or someone with an enduring power of attorney.
Nominating your legal personal representative as a beneficiary of your superannuation is crucial if you want your superannuation paid to someone other than a partner or child.
Secure your Legacy with a Binding Death Benefit Nomination
You can circumvent the discretion of the superannuation trustee by making a binding death benefit nomination – essentially a Will for your superannuation. If you want your superannuation to form part of your estate (and therefore be governed by your Will), you should nominate your legal personal representative.
A binding death benefit nomination is a legally binding document allowing you to dictate who will receive your superannuation death benefits, providing certainty that your wishes will be followed.
What If You Want To Leave Your Superannuation To Someone Other Than A Spouse, Child, Or Dependent?
You can nominate your legal personal representative in your binding death benefit nomination. Then, your superannuation becomes an asset of your estate to be dealt with under your Will.
But remember, a binding death benefit nomination is not a set-and-forget matter. You must keep your nomination up to date, typically every three years, to keep the nomination valid. Some superannuation funds will offer a non-lapsing nomination, but this depends on the super fund.
Choose Your Path: Binding or Non-Binding Nomination
A Binding Death Benefit Nomination
A binding death benefit nomination is legally binding on the superannuation trustee. It must be in writing, signed by the superannuation holder, and witnessed by two adults not mentioned in the nomination.
A beneficiary must also meet the definition of a superannuation dependant and the proportion payable to each beneficiary must be certain.
A dependant includes:
- A spouse (including de facto and same-sex partner).
- Children of any age (including adopted or ex-nuptial).
- Any person financially dependent on the superannuation member.
- Any person in an interdependency relationship with the superannuation member.
- A legal personal representative.
A binding nomination can be challenged in circumstances such as the following:
- The nomination process was not followed properly.
- The beneficiary does not meet the definition of an eligible beneficiary.
- The nomination was not received by the fund trustee before the superannuation holder’s death.
- The nomination was not made voluntarily.
- The nomination was made when the superannuation-holder lacked mental or legal capacity.
One of the biggest advantages of having a binding death benefit nomination is peace of mind. It provides certainty for you and your loved ones.
Another advantage of a binding death benefit nomination is the ease and speed with which a death benefit can be paid.
A Non-Binding Death Benefit Nomination
A non-binding nomination is not binding on the super fund trustee. The trustee will consider the nomination as an indication but has complete discretion to pay the benefit to who they believe is the most appropriate beneficiary.
Why Choose CLO Lawyers Toowoomba?
Crafting a comprehensive estate plan involves more than just a Will. The Wills and Estates team at CLO Lawyers is here to guide you through every step of the estate planning process.
Engaging an estate planning lawyer to create an estate plan will be minimal compared to the costs required to remedy an uncertain or disputed Will.
Contact CLO Lawyers Today
