Despite common belief, your superannuation fund does not form part of your Estate and is therefore not subject to the terms of your Will. Most superannuation funds allow you to elect to make a binding death benefit nomination which binds the Trustee of your superfund to pay your death benefit to your nominated beneficiaries. If you do not have a binding nomination in place at the time of your death, the Trustee of your fund has the discretion to decide who is to benefit from your super. The Trustee is not bound to follow the directions of your Will, as superannuation is not an asset of the Estate.
What is a binding death benefit nomination?
Your binding death benefit nomination is a legal instrument that binds the Trustee of your superfund to pay your benefit to your nominated beneficiaries. It provides certainty about who will receive your super and any applicable insurance benefits in the event of your death. There are usually two types of death benefit nominations, depending on the terms of your superfund; lapsing and non-lapsing. A lapsing nomination remains in effect for three years from the date it’s first signed, last amended or confirmed. If it lapses, it will then be treated as a non-binding nomination. A non-lapsing nomination won’t expire unless you amend or cancel it.
So who can you nominate?
You can nominate one or more of your dependants and/or your legal personal representative. Your dependents include your spouse, your children or your spouse’s children, any person who was in an interdependency relationship with you at the date of your death and any person who in the opinion of the Trustee, are or were in any way financially dependent on you at the date of your death.
If you nominate your legal personal representative, your superfund members’ benefit will form part of your estate and be distributed in accordance with your will or with the laws governing persons who die without a Will.
The payment of your superannuation death benefit will have tax implications and implications on your Estate so it is important to consult your financial and legal advisors prior to making a non-lapsing binding death benefit nomination.
For more information, please contact the experienced staff at Everingham Solomons because Helping You is Our Business.
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