Superannuation Death Benefits
What are they?
We all want to ensure that in the event of our death, our assets pass to the right person/s and it is important to understand that your super cannot be dealt with in your will.
Your super can be left to your spouse, children, a financial dependent or your legal personal representative. The only way it can be dealt with in your will is by leaving it to your legal personal representative.
There are a couple of ways your super can be dealt with, through a non-binding or binding death benefit nomination. These are instructions to the trustee of the super fund as to how you wish your benefits to be paid out. Under a non-binding death benefit nomination, the trustee will determine where the benefit goes, and in most cases, will follow your instructions, but is not obligated to do so.
Under a binding death nomination, the trustee must pay the benefit in accordance with your instructions.
Both options sound straight forward and in most cases one might view the binding nomination option to be the most fool proof, however, complications can arise in either case, where for example, a second marriage or split family is involved or a beneficiary is a bankrupt. In these cases, the deceased may lose control of where they wish the benefits to go.
Other considerations need to be reviewed when it comes to Self-Managed Super Funds because the surviving trustee in most cases will be your spouse, and issues that present, again, could be marriage breaking down including that of a beneficiary as well as bankruptcy.
As life circumstances and relationships change it is critical that death nominations be reviewed regularly to ensure they represent your wishes after you die. These situations can become complex and potential problems can be identified at a regular review with your adviser. Due to the potentially complex nature of individual circumstances, expert legal advice will be required to consider your situation and best way to make your death nomination in consort with your will.
- Peter Hallan