What happens to your super when you die?

Superannuation is forming an ever-increasing part of people's estates. If you think it is covered by your will, you may be wrong.

A will generally only covers the assets you own at death so, in most cases, it does not apply to your super. If you wish to direct who will get your super upon your death, you must sign a binding death benefit nomination (BDBN). If you die without signing a nomination, then your super is usually paid at the discretion of the trustee of the superannuation fund.

We recently handled the estate of a person whose will left everything to trusts for the benefit of his children, over which they were to get control at the age of 30. The trustee of the superannuation fund gave the deceased’s substantial superannuation entitlements to the children equally, even though they were still in their early 20’s. Clearly, the deceased would have preferred those funds to be protected by trusts while his children were still under the age of 30.

Another reason for signing a nomination is to minimise the tax that can fall on superannuation, depending on who is to receive it. If the deceased is receiving a pension from the superannuation fund, it may be beneficial to use a nomination to enable a beneficiary, such as a spouse, to continue to receive the same pension as the deceased had been receiving.

All of these factors apply equally to the large funds and to self-managed superannuation funds.

A binding death benefit nomination is a simple document, to ensure that your wishes are carried out, and that no unnecessary tax is paid.

For more information please contact Stephen Lynch.




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