What happens to your superannuation when you pass away?
Posted on February 01, 2017
After you die, your superannuation does not automatically form part of your estate to be distributed by your will. This is because your superannuation is held in a trust by your superannuation fund. So what happens to your superannuation in the event you pass away?
Upon your death, your superannuation fund can pay your superannuation directly to:
- Your spouse, including a defacto;
- Your children;
- A person you shared an interdependent relationship with; or
- Your estate, which is governed by your will.
Your superannuation fund will allow you to select which of the above you wish to receive your superannuation.
The best way to ensure that your superannuation is distributed to the intended person/s you select is to make a binding nomination with your superannuation fund.
A binding nomination allows you to select which of the above you want to receive your superannuation. If you nominate for your superannuation to be paid to your estate, then it will be paid in accordance with the terms in your will, allowing you the freedom to select a beneficiary other than the above dependants to receive your superannuation. In such a case, it is critical to ensure that your will properly describes how your superannuation is to be distributed.
In order for a binding nomination to be valid it must:
- be in writing;
- nominate a person or persons defined as a dependant as at the date of death;
- state the proportion of the superannuation fund you would like each nominated dependant to receive;
- be signed and dated in the presence of two witnesses who are 18 years old and not nominated in the form; and
- the witnesses must also sign and date a declaration that the member of the superannuation fund signed in their presence.
Binding nominations are typically valid for three years and must be renewed to continue after that period. For Self-Managed Superannuation funds, it is possible for a binding nomination to be valid for greater than three years provided the trust deed does not adopt the three year expiry provision.
Superannuation funds also offer non-binding nominations. A non-binding nomination is only used as a guide by your superannuation fund who is not bound by this type of nomination.
It is important to consider making a nomination if you have not already done so or to review any current nomination.
At Lynch Meyer Lawyers, we are happy to assist you making a nomination that best suits your circumstances and compliments your estate plan.
Please contact us to discuss further or to make an appointment.