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Make sure your super goes to your loved ones

While a Will states how you would like your hard-earned assets to be distributed, it doesn’t automatically include your super. That’s because, unlike directly owned property or shares, super doesn’t necessarily form a part of your estate. The super fund trustee will distribute it in accordance with super law and the fund’s trust deed and those decisions may not be what you had in mind.

That’s why it’s important to let your super fund know your wishes. Creating a valid binding death benefit nomination will bind the trustee to pay the death benefit according to your wishes.

A binding death benefit nomination is one of a variety of nominations – outlined in the table below – which legally allows you to advise or bind the trustee to pay your super benefit to who you want when you die, provided the nominees meet certain eligibility criteria.

Type of nominationDescriptionPositivesLimitations
No nomination The trustee has discretion and often pays the super benefit to the estate. No need to renew nominations. There is a chance your super benefits could go to someone you didn’t intend them to go to.
Non-binding death benefit nomination You can tell the trustee who you want your super benefits to go to. It will be considered by the trustee, but is not binding. The trustee can still exercise discretion which may suit you if your situation has changed. The trustee will ultimately make the decision as to who to pay your super benefits to.
Binding death benefit nomination The trustee must pay super benefits to the nominated dependants and in the proportions you set out. The trustee must pay benefits in accordance with your nomination. Your nomination must be renewed every three years to remain valid.

Who can you nominate as a beneficiary?

There are government regulations around who can receive a superannuation benefit – it’s not whoever you wish. The beneficiary must be a ‘dependant’*.

A dependant is:

  • a spouse or de facto spouse
  • children of any age, including step-children, adopted or children from previous relationships
  • someone who is financially dependent on you
  • someone in an interdependency relationship with you, such as a close living arrangement where one or both provides the financial, domestic, and personal support of the other.

We’ve recently enhanced the process for nominations

We will now treat expired binding death benefit nominations as non-binding death benefit nominations. The reason we’ve made this change is because it’s likely the choice you make in a binding death benefit nomination will often reflect your wishes at that point in time. In cases where that changes, owing to divorce or remarriage, for example, then you will need to contact us to update your nominations.

In a situation where there is no nomination made, either binding or non-binding, then the super fund trustee will distribute your benefit in accordance with super law and the trust deed. In practice, this generally means the member’s spouse or other dependants such as their children. In cases where the member doesn’t have any dependants then it will most likely be paid to  your personal legal representative.

Case Study

Joan is single and loves spending time with her nieces and nephews. Joan also dedicates a lot of her free time to helping her elderly parents. In the event of her death, Joan wants to make sure that her super is split so that her parents get half, while the other half is paid to her two brothers.

Her parents and brothers are not dependants under the government rules. For this reason, Joan can’t make a death benefit nomination directly to them. However, Joan is able to make a binding death benefit nomination to her ‘legal personal representative’ so her super benefits are included as part of her estate and are expressly dealt with via her Will.

To make sure her estate is dealt with in accordance with her wishes Joan arranges for her lawyer to draft her Will accordingly.

There’s more to know about binding nominations – including tax implications for your beneficiaries. That’s why we recommend you speak to a financial adviser before you take any action.

However, once you’ve decided to make a binding death benefit nomination, all you need to do is fill in a short form.

If you have any questions, please call us on 1800 787 372.

* In this article a dependant refers to a ‘SIS dependant’ which is an eligible person under the Superannuation Industry (Supervision) Act 1993 that a member may nominate as a beneficiary.