Superannuation Death Benefits – Who Gets Your Super?

​Who concludes what happens to your superannuation funds when you pass on?

You might believe that you do, however that isn’t generally the situation. A definitive choice might be made by somebody you don’t know – the legal administrator or trustee of your superannuation fund. So, today, let’s see what you can do to have more control.

​How to Make a Valid Binding Death Benefit Nomination

“Binding Death Benefit Nomination for Super Funds is a written direction from a member to their superannuation trustee. This sets out how members wish to distribute their superannuation death benefits. The nomination has three years validity and will expire If it is not renewed.”

The most certain method for coordinating payment of your superannuation death benefit is by getting a binding death benefit nomination. The nominated beneficiaries or recipients should be “dependants” – a spouse, de facto spouse, child or financial dependant. The beneficiaries could also be a legal representative like executor or administrator of a deceased estate.

If the selection has been signed and witnessed, the nominated beneficiaries will receive the payment. The nomination should also be current or valid at the date of death. Only then that the trustees of the superannuation funds should pay the death benefit.

Unlike Wills, a valid binding superannuation nomination is not going to be reversed by a court, so it gives more assurance. It really depends on the legal administrators or trustees of every superannuation fund to choose whether or not to permit binding nominations, so they aren’t accessible to everybody.

Since most funds are valid only for 3 years, it is important to check them and make sure they are up to date. Remember, some funds offer non-lapsing binding death benefit nominations.

 

Trustee’s Discretion

The trustee or legal administrator of your super fund is under a legal obligation to pay a death benefit to the member’s dependants. In most cases, it will be paid in a manner that is steady with the desires of the deceased member. Be that as it may, it is also possible that the trustee might perceive a more extensive scope of dependants than the member would have preferred – including a separated spouse.

Sometimes, the member’s favored beneficiary like the parents, may not meet the legal definition of a dependant. Without any dependants and/or a legal personal representative, the trustee might exercise their discretion, and pay the benefit to a non-dependant.

While dependants get the lump sum death benefits tax free, the rate of tax payable by non-dependants will differ from NIL to 32% relying upon the components of the superannuation payment.

 

Superannuation Pensions

The circumstance is somewhat different assuming the member has retired and is drawing a superannuation pension. With annuities, naming a surviving spouse as a reversionary beneficiary is normal. This implies the benefits will keep on being paid to the nominee, either until their demise, or until the funds run out.

If the reversionary beneficiary passes on, any remaining balance should be paid out as a single amount or lump sum death benefit as indicated by the kind of nomination they have made.

 

Good Advice is Required

Increasing levels of wealth can be held through superannuation and the nomination of beneficiaries should be made in the context of a comprehensive estate plan. This incorporates considering the manner in which superannuation death benefits are taxed when paid to various recipients or beneficiaries.

At Success Accounting Group, we can assist you with pursuing the best choice.

 

What’s Next?

If you want to have an absolute conviction about who gets your super, get in touch with us today.

One of our licensed and experienced Financial Advisors at Success Accounting Group will be happy to help you. We are ready to discuss your situation with you and give you an Action Plan.

 

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