Superannuation Death Benefit Nominations
Superannuation is rarely an active concern, but in the context of estate planning, it is crucially important as it is often one of your largest assets, however, your will does not determine what happens to your superannuation when you die. For this reason, it is important that as part of any estate planning discussions, your attention is brought to how your superannuation might be distributed upon your death.
Superannuation isn’t distributed according to your will as generally you don’t “own” the superannuation – rather, it is held and invested on your behalf by a superannuation trustee. When you due, superannuation is generally distributed in one of three ways – as specified by a Binding Death Benefit Nomination, as requested by a Non-Binding Death Benefit Nomination, or otherwise as determined by the trustee who manages your superannuation fund. These vastly differ, and can have significant consequences for what happens with your superannuation, and if you get it wrong, there can be terrible consequences.
A Binding Death Benefit Nomination specifies exactly who your superannuation is to be paid to upon your death. If the nomination remains valid, then the superannuation trustee must pay the superannuation exactly as you have directed.
A Non-Binding Death Benefit Nomination allows you to nominate who you want your superannuation to be paid to when you die. Whilst uncommon, the superannuation trustee has the ability to decide not to pay your superannuation as you have requested (say for example, you had nominated your spouse many years earlier to receive your superannuation, but had since been separated for years – the superannuation trustee might decide to instead pay your superannuation to another eligible person, such as your children, instead of your ex-spouse).
Where there is no nomination, then when you die your superannuation will be paid to an eligible person (or persons) as decided by the superannuation trustee.
On top of this, your superannuation death benefits can only be paid to certain eligible persons or your estate under the law.
Superannuation death benefit nominations therefore are generally an integral part of your overall estate planning strategy, and should be actively integrated as such. As part of your estate planning, Ashton Estate Lawyers will advise and can assist in ensuring your superannuation death benefit nomination is valid and properly implemented as part of your overall estate plan, whether through a standard superannuation fund or a self-managed superannuation fund. Contact us for a free 15-minute telephone discussion regarding your estate planning and ensuring that your testamentary wishes are implemented both in relation to your will and superannuation death benefits.