You might not think about estate planning if you are young and have not accumulated much wealth or if most of your assets are jointly owned with your spouse. However, what about your superannuation? The death benefit payable from your superannuation fund may be substantial, especially if your fund provides insurance upon your death.
Typically, the trustees of the superannuation fund decide who receives your money and how much each beneficiary gets. This can lead to disputes, particularly if you have ex-spouses, children from other relationships, or if your family relationships are not harmonious.
Since your super is likely to be your biggest asset after your house, ensuring an orderly distribution can save your family a lot of grief. Don’t leave the outcomes to chance.
Binding Death Benefit Nomination
If your superannuation fund allows, you can put in place a binding death benefit nomination. This allows you to decide who will be a beneficiary instead of leaving the decision to the trustee. You can nominate:
- A current spouse
- Your children (including step and adopted children)
- A person who is financially dependent upon you or living in an interdependency relationship with you
- Your estate
Nominating one or more of your dependants directly instead of your estate may allow them to receive the money more quickly and with less potential for disputes. If you nominate your estate or in case the trustees choose to pay your estate, it is also generally wise to include instructions on distributing your super in your will.
Key Considerations
- Validity: The nomination needs to be made in the correct format to be valid. Check the details with your superannuation fund.
- Renewal: Ensure the nomination stays up to date. Many funds require you to renew the nomination at least every three years.
- Self-Managed Super Fund (SMSF): If you have your own SMSF, considering a binding death benefit nomination is still important to avoid family disputes.
Why It Matters
A binding death benefit nomination allows you to make a clear decision about who should receive your superannuation benefits. This clarity can help prevent disputes among family members and ensure that your superannuation benefits are distributed according to your wishes.
Final Thoughts
Your superannuation is an important asset, and planning for its distribution is crucial. Make sure your binding death benefit nomination is valid and up to date to ensure your beneficiaries receive the benefits you intend for them. Speak with your superannuation fund to confirm the correct process and keep your nomination current.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
