Young people I speak to often scoff at the thought that they need a Will, and when I tell them that their largest asset is likely to be their superannuation, they tell me that they have not worked long enough to have any significant funds in superannuation.
However, contrary to this belief, young people often have an insurance component built into their superannuation, which can significantly inflate the payout that would be made from their superannuation if they passed away at a young age.
Binding Death Benefit Nomination
A Binding Death Benefit Nomination (BDBN) is a document in which you direct the Trustee of the Fund as to whom will receive your superannuation in the event of your death.
There are specific rules for the proper execution of a BDBN, including:
(a) It must direct your superannuation be paid to a dependant (i.e. spouse, child or an interdependent);
(b) It must be signed before two adult witnesses; and
(c) It may lapse after three years, depending on the superannuation fund, and as such, must be renewed.
If a person dies without a valid BDBN directing where their superannuation is to be paid, the Trustee of the Fund has discretion as to whom your superannuation is paid. This may be contrary to your wishes or leave family members who need those funds in dire need. The decision as to who is paid the superannuation can take months and making a claim of superannuation can be a costly exercise.
If you have previously prepared a BDBN but are unsure as to whether it is current, you should check your latest superannuation statement and update your BDBN if required.
If you have not previously prepared a BDBN, you should do so as soon as practicable. An experienced lawyer in our Wills, Estates and Succession Planning team would be pleased to assist you with this process.
If you have any queries regarding BDBNs, please contact us to ensure your loved ones are not left with a dispute as to the payment of your entitlements in the event of your death.
If you require advice or further information in relation to any of the matters discussed in this article, please contact our Wills, Estates & Succession Planning team on 03 5273 5211.