It is common for people to think that they don’t have many assets and, therefore, do not need estate planning advice when actually the superannuation benefit payable on their death is often a substantial amount and is their most significant asset.
Many people do not realise that some assets, such as superannuation, life insurance and jointly held assets (usually the family home), will not automatically fall into their estate when they pass away. As superannuation is not an estate asset, on a person’s death their superannuation benefit does not automatically flow to their estate. Generally, the trustee of the superannuation fund will pay a superannuation benefit in accordance with the governing rules of the fund and relevant legislation at the time of death.
Who is entitled to claim your superannuation benefit?
In the event that you have not prepared a valid Binding Death Benefit Nomination then your spouse, children and anyone else classed as your dependent are able to make a claim for your superannuation benefit.
For the purpose of superannuation laws:
- a “dependent” includes:
- a spouse (including a defacto partner);
- children under the age of eighteen (18);
- any person financially dependent on you; and
- a legal personal representative.
- a “spouse” includes anyone living with you as a defacto partner at the time of your death regardless of the period.
A way to override the trustee’s discretion is to prepare a valid Binding Death Benefit Nomination. This will ensure that your superannuation benefits are received by your intended beneficiary or beneficiaries.
Binding Death Benefit Nominations
If you wish to ensure that your superannuation benefit will be paid in accordance with your wishes then you will need to have in place a valid Binding Death Benefit Nomination at the time of your death.
A Binding Death Benefit Nomination is a legally binding nomination that allows you to advise the trustee of your superannuation fund who is to receive your superannuation benefit in the event of your death. However, in order for it to be binding it must be valid (properly completed and witnessed). It is also important to note that Binding Death Benefit Nominations will usually lapse every three years and need to be renewed. Therefore, if you have previously prepared a Binding Death Benefit Nomination, however, it has lapsed the decision as to who receives your superannuation benefit will revert to the trustee of your superannuation fund.
A properly prepared estate plan is essential to ensure that your assets are distributed in accordance with your wishes. If you would like further information and assistance to undertake estate planning including preparation of a valid Binding Death Benefit Nomination, please do not hesitate to contact one of our local experts today on 4963 2000 or via our online contact form.