Did you know that generally you cannot direct the funds held in your superannuation account in your Will? Your superannuation is not automatically covered in your Will as your Will only addresses what is to happen to those assets which you own –your house, car, savings, and investments. If you want to nominate who will receive the benefits payable from your superannuation when you pass away, it is best to complete a Binding Death Benefit Nomination form.
Put simply, a Binding Death Benefit Nomination is a legally binding document which allows you to direct the Trustee as to who will receive your superannuation benefits in the event of your death. So long as the nomination made is valid, a Binding Death Benefit Nomination leaves the Trustee with no freedom of choice as to who receives your benefits. You can choose to either direct your benefit to one or more dependents, or to your Legal Personal Representative, who is then required to pay out the money from Estate in accordance with the terms of your Will.
For a Binding Death Benefit Nomination to be valid, it must direct your benefits to be paid to a person who is eligible to receive the benefit as a ‘dependent’. A ‘dependent’ can be a spouse (including de facto, or same-sex), children of any age, any person who is financially dependent on the member, any person in a relationship of interdependency with the member, or your Legal Personal Representative.
Some people have a ‘non-binding’ nomination in place for their superannuation. Whilst this can still guide the Trustee as to how you would like your benefit to be paid out, the Trustee retains the final say and may exercise its discretion to pay the benefits out in a different way.
The total amount payable from a superannuation account upon the death of the member is the money held in the deceased’s super account at the time of death, and any life insurance cover provided through the superannuation fund.
As Binding Death Benefit Nominations are a formal, legally-binding document, they should also be updated every three years, similarly to how frequently you should review and as required, update your Will. This way, these Nominations can reflect any change in personal circumstances that may influence your wishes.
Each superannuation fund has its own rules and processes used to determine who the most appropriate beneficiary is, in circumstances where either an invalid, non-binding or no nomination is made. To avoid confusion and conflict, you should properly consider the role of your Binding Death Benefit Nomination as part of an overall estate plan.
If you require advice or further information in relation to any of the matters discussed in this article, please contact our Wills, Estates and Succession Planning team on 03 5273 5203.