Is it enough to have a will?

By Daniela Pavlovic of Harwood Andrews

Many people mistakenly assume that their will deals with their superannuation benefits on death.

The distribution of superannuation benefits on the death of a member are governed by specific superannuation laws and the rules of the superannuation fund – not your will.

Whilst it is important to have a will, it is just as important to ensure that you have a valid death benefit nomination are in place to deal with the distribution of your superannuation benefits on your death.

You can nominate who you would like to receive your superannuation death benefits by completing the beneficiary nomination form prescribed by your super fund.

Binding vs non-binding nominations

There are two types of nominations – non-binding and binding.

A binding nomination, as the name suggests, is binding on the trustee of your super fund and directs the trustee to pay your superannuation death benefits to the person or persons you have nominated, in the proportions stated. Some binding death benefit nominations are non-lapsing, whereas others are lapsing and need to be renewed every three years to remain valid.

In contrast, a non-binding nomination is treated merely as an expression of your wishes. The trustee of your super fund will consider your nomination but is not bound to follow it.  Ultimately the trustee of your superannuation fund will decide to whom your superannuation benefits will be paid and in what proportions.

If you do not have a nomination at all the trustee of your super fund will decide who receives your superannuation death benefits.

It is important to complete the death benefit nomination form carefully and ensure that you are nominating an eligible beneficiary. Otherwise any binding nominations you make may be invalid.

Who can you nominate as a beneficiary?

Superannuation death benefits can only be paid to a dependant or to your legal personal representative, that is, your executor.

A dependant is:

  • a spouse (including de facto spouse),
  • a child of any age (including a step-child),
  • someone in an independency relationship with you (a close personal relationship between two people who live together, where one or both provides financial, domestic and personal support to the other), or
  • someone who is financially dependent on you.

You can nominate more than one dependant.

If you nominate your legal personal representative (your executor) then your death benefits will be paid to your estate and will be distributed in accordance with your will.

If you nominate someone who is not a dependant (such as a parent, sibling, friend, nephew or niece) then your nomination is invalid, unless that person is in an interdependency relationship with you.

Failure to adequately deal with your superannuation benefits as part of your estate plan can result in your superannuation benefits being paid in a manner that you don’t intend and expose your family to disputes about how your superannuation benefits are to be distributed.

By Daniela Pavlovic of Harwood Andrews

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