Superannuation Death Benefits

There is much confusion among clients and their estate planning as to where their superannuation benefits fit in with their Wills. Superannuation may or may not form part of your estate on your death to follow the terms of your Will or if you do not have a Will (it is never too late to fix this) to follow the rules of intestacy.

In general terms the trustees of your superannuation fund have a discretion as to payment of your superannuation death benefit (which may include any life insurance component held within your superannuation fund) on your death between certain eligible dependents.  Those dependents are typically a spouse, children and other financial dependents or inter-dependents.

Most superannuation funds enable members to implement binding death benefit nominations so as to direct the payment of your superannuation benefits to your desired beneficiaries in the proportions that you specify.  Appropriate binding death benefit nominations also enable you to nominate the executor of your estate to receive your superannuation benefits so as to follow the terms of your Will.

It is important to be aware that unless your desired beneficiaries fall within the criteria of relevant “dependent(s)” then your superannuation will not be able to pay any portion of your death benefits to those people and in that case, your nomination will need to properly be structured and implemented to be dealt with through your Will.  These are important documents to get right and if not implemented correctly, can unfortunately lead to many disputes resulting in increased costs and delays and family disharmony.

Binding death benefits can also be a very useful tool in situations of mixed marriages, likely challenges to Wills and estate planning generally.

If you’re not sure how to proceed – ask us and we will be happy to work with you to get it right.