Your super fund can decide who will receive your superannuation when you die.
But wait, we’ve got more shocking news… Even if you have a Will that deals with your superannuation and states who you want to receive it, your super fund can still decide to pay your superannuation to someone else.
So, why can my super fund decide?
Superannuation is not considered to be the same as other personal assets such as your home, car or cash in bank accounts. These personal assets can be dealt with by your Will or if you don’t have a Will, by the laws of intestacy.
In contrast to personal assets, Superannuation is instead held in a trust by your super fund. As a result, this means the trustee of your super fund and super laws govern how it is dealt with upon death.
Can I control who gets my superannuation?
YES. You must make a document called a ‘Nomination’ in order to have control over who will receive your superannuation.
What is a Nomination?
A Nomination is a legal document that binds the trustee of your super fund to pay your superannuation to your nominated beneficiaries.
Depending on your super fund, there are different types of Nominations that may be available. For example:
- A Binding Nomination. Your super fund must follow your instructions in this Nomination. The Nomination must be renewed every 3 years; otherwise it will expire.
- A Non-lapsing Binding Nomination. Your super fund must follow your instructions; but it will not lapse unless it is modified or revoked;
- A Non-Binding Nomination. This Nomination is a guide only and your super fund will have the discretion to decide.
Who can I nominate to receive my superannuation?
You can nominate your legal personal representative (executor of your Will or administrator of your deceased estate if you don’t have a Will) and/or one or more of your dependants.
Nominating your dependant/s
A dependant includes:
- your spouse (including same-sex and de facto);
- your child, your adopted child, your stepchild, a child of your spouse or your child within the meaning of the Family Law Act 1975;
- someone who’s financially dependent on you;
- someone who has an interdependent relationship with you, meaning:
- a close personal relationship;
- they live with you; and
- one or each of you provides the other with financial and domestic support, and personal care.
Nominating your legal personal representative
When you want to pay your superannuation to someone that is not a dependant as outlined above, you should nominate your legal personal representative. This is because your estate will receive your superannuation benefits. The benefits will then be paid as you instruct in your Will.
Who should I nominate, and which Nomination should I choose?
You should obtain advice as it will depend on your individual circumstances. For example, your overall family dynamic, the type of super fund, the ages of your beneficiaries as well as their relationship to you.
At Martens Legal, prior to an initial meeting, we will ask our clients to complete an estate planning questionnaire which will allow us to provide appropriate and tailored advice on the day.
Please refer to our previous post – Be the Person With A Plan… An Estate Plan for more information on our process.
Advantages of a Nomination
The main advantages include:
- Certainty that your superannuation will be paid in accordance with your wishes;
- Tax advantages by paying superannuation to certain dependants such as your spouse or child under 18; and
- Less likelihood of a successful challenge by a disgruntled beneficiary.
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The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based upon your particular circumstances.