Most people have significant amounts of money invested in
superannuation funds. We plan to cash it in or get it as a pension
when we retire. But what happens if we die while still working?
The most important thing to know is that if you die while a
member of a superannuation fund, the fund money does not
necessarily form part of your estate and pass to beneficiaries in
accordance with the provisions of your Will.
Remember - super balances are not held by you. They are held by
super fund trustees on your behalf. If you die, the trustee decides
what happens to your super. So how do you make sure your super goes
where you want it to?
The answer may be a Binding Death Benefit Nomination. It's
best to seek expert advice on this for your particular situation.
They must be in writing and properly witnessed.
The binding nomination tells the super fund trustee how a death
benefit is to be distributed in the event of the member's
death. The trustee has to follow it.
There are choices to consider: There may be reasons to direct
benefits to your estate so that it is paid pursuant to your Will.
Equally, in some circumstances there may be a tax advantage for
your dependents if they are nominated to directly receive the
If there's no such nomination the trustee decides how
benefits are distributed. Not every super fund - especially
industry funds - allows such nominations. Best check before
Another trap is if you leave your super to your adult children
who are financially independent; they could be hit with high
It's important to remember a binding nomination is different
to a Will. For instance, John, a widower dies with $1million in
super and a will dividing his estate equally among his three
children. But he has no binding nomination, and under the
legislation the super trustee is bound to pay the benefit to
'dependents'. If one of the children (even if an adult) is
classified as being dependent upon John but the other children are
not, then the trustee could exclude the others even though
John's Will clearly shows he wanted all his offspring to get an
Don't forget binding nominations do lapse and unless they
are renewed the trustee will decide what to do with your super
money. This could mean adult offspring miss out entirely if there
is a new partner with dependent children, " Mr Crowther
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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There are several requirements that must be completed by an executor before the distribution of assets to beneficiaries.
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