During your working career, your employer sets aside money for your retirement in your super fund. Superannuation is slowly becoming one of the biggest assets that a person has when they pass away. In light of this, it is important that your Estate Planning is in order.
Superannuation contributions made by your employer are invested to accumulate wealth for your future use and later enjoyment.
Having a Self Managed Superannuation Funds (SMSF) is also a way of saving for your retirement and that comes with other benefits.
In estate planning, there are a few things that are important to bear in mind regarding your superannuation funds.
For example, how you would like your superannuation funds distributed, should the unfortunate occur, and you pass away unable to enjoy your retirement funds.
Who receives the funds and how it is divided are also decisions that matter to give you peace of mind and to ensure that they are done according to your wishes.
There is a misconception that upon death, superannuation is dealt with in a will.
This is not the case as the distribution of superannuation benefits is decided by trustee (s) of the fund at their discretion.
Of course, if you are to retire, the trustee would also be responsible for releasing your fund for your benefit.
However, in the event of your death, such payments are called “superannuation death benefits”. The trustee(s) is also be governed by the Trust Deed which complies with separate legislation to the Succession Act 1981 (Qld).
Can I decide who receives my Superannuation Benefits upon my death?
The short answer is yes.
A Binding Death Benefit Nomination (BDBN) is the best way. If you nominate beneficiaries using a BDBN it means that the Trustee will pay your death benefits to your nominated beneficiaries.
It will ensure that upon your death, notice is given to the Trustee to pay the death benefits to one or more of your dependant(s) as nominated in your BDBN. If you have not nominated anyone then your death benefits will be paid to your legal personal representative and will form part of your estate.
These are options within your super forms, which need to be ‘ticked’ and filled in to make sure you have nominated beneficiaries.
Some superannuation funds only allow for BDBN that lapse every three years so you need to make sure that you update your BDBN. If your superannuation fund allows for non-lapsing BDBN then this is the best option to choose as you do not have to update your nominated beneficiaries every three years. You can however change your beneficiaries as and when you wish.
Other superannution funds do not allow for the nomination of beneficiaries at all. This will mean that your death benefits will fall into your estate. It is therefore important to make sure that you have a Will in place to ensure that your wishes about who you want to benefit from your death benefits are recorded.
Who can be dependents?
The Superannuation Industry (Supervision) Act 1993 (Cth) defines “dependant” to include a member’s spouse, child and any person with whom the member has an interdependency relationship.
You must also ensure as a member that you comply with the conditions and laws of the Trust Deed when filling out the form.
We would advise you to seek legal assistance and advice regarding the BDBN to ensure that it is completed correctly and complies with the laws that governs it.
This is also important as in the absence of a valid BDBN, the Trustee will have discretion to determine who receives the superannuation death benefits.
You may not get the chance to decide who receives the benefits according to your wishes.
We recommend that you speak to one of our Estate Planning Lawyers if you would like assistance in completing your BDBN or your Estate Planning in general.
A mistake in completing your BDBN can be fatal to the validity and enforceability of the BDBN. Please contact our client engagement team on (07) 3252 0011 to book an appointment with our Estate Planning Lawyers today.
For more information regarding estate planning and superannuation see: https://www.corneyandlind.com.au/estate-litigation/superannuation-estate-planning/
To understand more about binding and non binding death nomination benefits see: https://www.corneyandlind.com.au/resource-centre/superannuation-binding-non-binding-death-benefit-nominations/