Your superannuation fund (i.e. ‘super fund’) may be a major, if not the largest, asset of yours. When managing your estate and assets it is crucial understand how your superannuation benefits are dealt with after your death.
How are my super benefits dealt with?
Your super fund is managed by a board of trustees (‘the trustees’) and holds your super benefits on your behalf.
Your super benefits are accessed either:
- When you become of eligible age; or
- Upon your death, for your beneficiaries to access
Unlike ordinary assets, superannuation benefits cannot be ‘willed’ under your Will. Superannuation funds are regulated by the super legislation exclusively, while Wills are regulated by separate Wills and Estate-related legislation.
Like Wills, to ensure that your super benefits are distributed after death as reflected by your wishes, you need to have a valid ‘death benefit nomination’.
Death Benefit Nominations
A death benefit nomination is a legally binding nomination that informs the trustees of your super fund who will receive your super benefits in the event of your death.
There are four types of death benefit nominations:
|Binding Death Benefit Nomination||The super fun must pay the benefits according to who you have nominated. Valid for three years and lapses if not renewed|
|Non-lapsing Binding Death Benefit Nomination||Same as Binding Death Benefit nomination. However, this remains in place indefinitely unless replaced with a new nomination|
|Non-binding Death Benefit Nomination||Provides guidance to the super fund on how you wish for your benefits to be paid out, but the super fund will ultimately decide on the distribution|
|Reversionary Beneficiary Nomination||If you were receiving regular pension payments from your super fund, the payments will revert to your nominated beneficiary upon your death (rather than a lump sum)|
The trustees of your super fund are bound to follow the nomination, provided it is valid.
What happens if I don’t make a death benefit nomination?
A valid binding death benefit nomination provides clarity and certainty over who you wish to receive your death benefits.
In the event you do not have a valid nomination, the trustees of your super fund will decide at their discretion who to direct the benefits.
Are self-managed superannuation funds treated differently?
Simply put, no. Like your super fund, self-managed superannuation funds are regulated by the terms of their Trust Deed and relevant legislation.
Where to from here?
Uncertain whether your death benefit nomination is valid? Give us a call at Wealthsource Legal on (03) 9590 6180 and let us navigate this through with you.