(Last Updated On: September 25, 2017)
Most people commonly assume that whatever you say in your will determines how your superannuation is dealt with. This is usually NOT the case. Superannuation must be paid by the Trustees of the Superannuation Fund in accordance with the governing Trust Deed (which must itself comply with the requirements of the Superannuation legislation.
The Super Fund will pay it either:
- in accordance with any valid Binding Death Benefit Nomination; or
- to ‘financial dependants' (as defined by the legislation).
To be valid, a Binding Death Benefit Nomination must be comply with the following requirements:
- prepared within 3 years of your death;
- be properly signed by you, witnessed by two other people, dated and given back to your Super Fund.
- the nominated person to benefit can only be a ‘financial dependant' or your legal personal representative (i.e. the executor named in your will).
Binding Death Benefit Nominations commonly fail because they were not signed properly, were not updated or because the person you nominated was not a ‘financial dependent (e.g. if you nominated your parents or cousin etc they would not usually qualify as a financial dependent).
So, if you want to give your superannuation to someone who is not a financial dependent, you have to make a Binding Death Benefit Nomination giving it to your Personal Legal Representative (your executor) and then stating in your will who gets it.
Note, however, that there may be other reasons why this might not be a good idea:
- If your will is likely to be challenged under the Family Provision legislation, it is better not to have the superannuation paid to your estate;
- if the intended beneficiary is a potential bankrupt money paid directly from the Super Fund (and not through the will/estate) is a ‘protected asset' and cannot be used to pay creditors.
You should always get proper legal advice to prepare a will.