
Did you know? Superannuation is not an asset of your estate and therefore not covered in your will? The legal owner of your superannuation balance is actually the trustee of your nominated super fund. You are only the beneficial owner! So, how can you can ensure the trustee takes your wishes into account when determining how to distribute your superannuation in the event of your death.
So do you know what will happen to your super when you die?
In most cases, we assume that having a valid will in place will cover the distribution of our assets, including our super, in the event of our death.
However, this isn’t quite the case when it comes to our retirement savings. In fact, the trustee of your super fund isn’t required to take the wishes outlined in your will into account.
How can I manage where my super goes?
The good news is that when it comes to nominating the beneficiary that you would like to receive your super death benefit, it’s as easy as filling in a form and submitting it to your super fund. This is called a death benefit nomination which is a legally binding nomination allowing you to advise your super trustee on who will receive your super benefit in the event of your death. There are a few types of death benefit nominations designed to suit a series of personal situations. These include:
- Non-binding nomination This type of nomination means the trustee of your super fund considers the benefit nomination you have made. The trustee ultimately determines which of your beneficiaries receives your super and in what proportions.
- Binding nomination (BDBN) A BDBN means that the trustee of your super fund must pay your super death benefit to the beneficiaries that you nominate, in the proportions that you have listed. This nomination overrides the super fund trustee’s discretion over how who your super goes to. BDBN’s tend to lapse after three years unless renewed and SMSF’s you will need to check if the trust deed allows this type of benefit nomination.
- Non-lapsing binding nominations A non-lapsing binding nomination works in a similar way a BDBN, however it never expires and remains in place until cancelled or replaced with a new benefit nomination.
- Reversionary nomination Some super funds allow owners of super income streams to make a benefit nomination. This way, the income stream reverts to a particular beneficiary.
Who decides where my super goes without a death benefit nomination?
If you don’t make a death benefit nomination, you super fund trustee ultimately determines how your super is paid. If you would like to find out more about death benefit nominations or seek advice that is specific to your circumstances, we are here to help. Get in touch with your team today.
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