For many people, superannuation may be one of your largest assets and as difficult as it may be to think about death, you should not overlook your superannuation when making your will.
Upon death, if your super has not yet been realised, your superannuation will include the possibility of a payment of a death benefit which usually includes your super balance and any insurance benefits that you may be entitled to under the terms and conditions of your super fund.
You may be surprised to know that it is actually up to the Trustee of your super fund to determine whether there is a death benefit payable and who is to receive the death benefit. That is because your super is actually money held on trust by the trustee of the superannuation fund. The outcome is not necessarily in accordance with your Will or wishes.
However, most super funds allow you to nominate who you would like to receive any death benefit payable, and these nominations can be both binding and non-binding.
A binding nomination ensures your death benefit goes to the beneficiary you specify. This usually has to be updated every 3 years. You will need to complete a binding death benefit nomination form, which can be obtained directly from your superannuation fund.
A non-binding nomination is only persuasive on the trustee of your super fund, under the rules of the super trust fund and the super regulations; it is taken into consideration by the fund when deciding who to pay your death benefit to.
What happens if I have not made a nomination?
When determining who receives your death benefit if you have not made a nomination, the Trustee looks at who are your dependants. These include firstly your spouse or partner, then your children and lastly anyone in an “interdependent relationship” with you. An interdependent relationship is defined as someone who lives with you, is financially dependent on you and shares a close personal relationship with you.
If you do not have any dependants and have not made a nomination, then your super will be paid to your Estate and therefore distributed in accordance with your wishes in your Will.
An important consideration is that there may be different tax effects depending upon who the payment is made to, therefore it is essential to make sure you get advice from us to make sure your nomination is best for you and your family’s circumstances. Call 03 5445 1000.