Wrong! This is one of the biggest misconceptions people have when talking about Superannuation. Superannuation is not an asset of your estate, and as such is not distributed in accordance with your Will. Superannuation is distributed by, and at the discretion of, the Trustee of your Superfund.
Most people have provided their commercial superfund with a non-binding beneficiary nomination, however while it gives the Trustee an idea of who you would like to give the benefit of your superannuation, they are in no way bound by this nomination.
You can however override the discretion afforded to the Trustee of your Superfund by completing a Binding Death Benefit Nomination (BDBN) It is important to ensure that the BDBN is valid. This included having the BDBN signed by two witnesses, be made out in writing to the Trustee and contain a declaration.
In addition to this, your nomination of a beneficiary must be someone who is considered a dependent, ie spouse or child. In the absence of a dependent person or at your election, you can nominate your Legal Personal Representative to be the recipient of your death benefit. In these circumstances, the superannuation will essentially become part of your estate and distributed in line with the wishes set out in your Will. It is important to note that some BDBN’s expire after a period of three years. So it is recommended that you review them regularly
In the absence of a BDBN, the Trustee is required to search for any potential dependent persons, then assess the capacity of the dependent, take into consideration any non-binding nominations and then decide on the distribution to take place. This process can be quite drawn out and the wishes of the deceased are not always upheld.
What if you have a self-managed super fund (SMSF)?
You can still bind the Trustee by completing a BDBN. Unlike other Superfunds a BDBN does not necessarily expire after a period of three (3) years. This however is governed by the rules set out in your Superannuation Fund trust deed. If necessary these rules can be amended so that a BDBN does not expire.
It is important to thoroughly consider your estate plan while you still have capacity to do so. Everingham Solomons have experienced Solicitors who can assist you to plan what happens to your estate or review what you have in place because Helping You is Our Business.
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