Death Benefit Nominations for your super

Did you know that on your death, your superannuation balance will not dealt with in accordance with your wishes unless you have a valid beneficiary death benefit nomination in place. That’s right, your Will probably doesn’t have any effect as regards your super.

The trustees of most super funds have a discretion as to who to pay a benefit to and usually, the fund rules specify the member’s dependants as the class of beneficiaries to be considered first, with the trustee to determine the amounts/proportions.

Imagine what happens if you are separated (but not divorced) and you are living with another person (as a de facto) – a dispute could easily arise. What if you have children? What would/should the split be?

If you have no dependants, the trustee will likely pay it to your estate, but why take the risk? and does your Will adequately deal with that asset?

To minimise disputes and avoid applications to the Superannuation Complaints Tribunal or the Supreme Court of NSW, make a nomination. There are generally 2 types: Non-binding and Binding

NON-BINDING NOMINATIONS

A non-binding nomination is an indication to your trustee of your preferences but it is, as it states – non-binding so the trustee can ignore it. This can be a good idea if there are significant changes in circumstances before your death where you haven’t got around to updating your nomination. The trustee’s discretion could prevent it going to your ex or avoid the situation of you accidentally omitting one of your kids from a benefit.

BINDING NOMINATIONS

A binding nomination is exactly that – binding (provided that it is valid as at the date of death). There are 2 sub-categories of binding nomination: lapsing and non-lapsing.

  • LAPSINGMost funds provide for the lapsing type – these need to be renewed every 3 years or the nominations lapse.
  • NON-LAPSING – Some Self-Managed Super Funds (SMSFs) and some retails funds allow in their deeds for nominations that never lapse (unless you update it). Older SMSF Deeds and their Rules do not allow for the non-lapsing type.

There are requirements for making any nomination legally valid, witnesses etc.

Speak to us about your estate planning and ensure your wishes are properly documented.

WANT MORE INFORMATION?

For more information on superannuation and retirement planning, please contact Fionne McKillop at McKillop Financial Planning on (02) 9542 2904 or email fionne@mckillopfp.com.au

Fionne McKillop is a director of McKillop Legal Pty Ltd and as a result, will receive distributions and/or other benefits from McKillop Legal.

DISCLAIMER
Content contained in this document is general information only and is not advice, financial planning, legal or otherwise.
This document was prepared by Integrated Planning Systems Pty Limited ABN 21 051 429 184 trading as McKillop Financial Planning, an Authorised Representative of GWM Adviser Services Limited ABN 96 002 071 749 trading as MLC Financial Planning, Australian Financial Services Licensee, 105 – 153 Miller St, North Sydney NSW 2060, a member of the National Australia Bank Group of companies. The information is current as at 17 March 2017.
The article does not take into account your personal objectives, financial situation or needs. Accordingly, you should consider how appropriate the information is to you with regard to your personal circumstances. You may wish to obtain an adviser’s assistance, tax and/or legal advice to make this assessment. Before buying any financial product, you should read the Product Disclosure Statement (PDS) for that product and consider the contents of the PDS before making a decision about whether to acquire the product.
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