Did you know that superannuation is a non-estate asset, meaning
that it's not automatically distributed in accordance with
terms in your Will? Below are some things you need to know about
who can receive your superannuation death benefits and how to
ensure those benefits reach your intended recipients.
So who can receive your superannuation when you die?
There are strict rules contained in the Superannuation Industry
Supervision legislation, and typically also in the trust deed
applicable to the relevant superannuation fund, which govern how
your superannuation death benefits are distributed when you die. It
is important to follow these rules so that your superannuation
death benefits are paid to those you intend will receive your
Upon death, subject to the trust deed of the fund, your
superannuation death benefits can only be paid to your
superannuation dependants or your estate.
Superannuation dependants include:
your spouse (including a de facto spouse)
your children (regardless of age)
a person with whom you have an interdependency relationship
(ie. a close personal relationship between two people who live
together, where one or both provides for the financial and domestic
support, and care of the other), and
a person who is financially dependent on you.
You should note that the tax on superannuation death benefits
varies depending on the recipient of the benefits, the components
that make up the benefit and how the benefit is paid (for example,
lump sum or income stream). The taxation treatment of
superannuation death benefits isn't straightforward and you
should speak with your financial advisor or accountant when
deciding to whom and in what manner you would like your
superannuation entitlements to be paid.
How can you ensure your super goes to the right person
when you die?
You can nominate the beneficiaries of your super fund by letting
the trustee of your fund know in writing. Most superannuation trust
deeds allow members to nominate beneficiaries in one of the
Non-Binding Death Benefit Nomination - This type of nomination
is only a guide and the trustee of your superannuation fund will
have the ultimate discretion as to which superannuation dependant
will receive your super. Although the trustee will take into
consideration any nomination of beneficiaries that you have made,
they aren't not legally bound.
Binding Death Benefit Nomination - This is a legally binding
nomination and removes the discretion of the trustee of the
superannuation fund to determine who your benefits are paid to upon
your death. To be valid, a binding death benefit nomination must be
signed by you and witnessed by two people who aren't
Binding death nominations are usually only valid for three
years, although some superannuation funds provide for non-lapsing
What happens if you don't have any
If you don't have any superannuation dependants and you want
someone else (for instance siblings, a friend or a charity) to
receive your superannuation, you'll need to nominate your
estate (that is, the Executor of your Will and preferably via a
binding death benefit nomination) as the beneficiary of your
superannuation entitlements. Your superannuation will then be
distributed according to the terms of your Will.
To ensure your superannuation ends up in the right hands and in
the most tax effective way, professional advice should always be
sought from your financial adviser or accountant and an experienced
estate planning lawyer.
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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