News and Insights

One of the most common questions I get asked by estate planning clients is if they should make a death benefit nomination for their superannuation fund.  My answer always depends on their particular circumstances, but usually involves a discussion about the following:

1. Did you know, according to The Association of Superannuation Funds of Australia, Australians have $3.5 trillion invested in superannuation assets at the end of the March 2022 quarter?  We are the fourth largest holder of pension funds in the world.
2. Based on the above statistics it’s not hard to understand that outside of property, superannuation assets usually represent a client’s next most significant asset.
3. Superannuation is not an asset of your estate.  This is because your entitlements are held in trust by your superannuation fund until you or your estate is legally entitled to access it, which is usually by meeting a condition for release.
4. There are two types of nominations that can be made.

• • A non-binding death benefit nomination is at best an expression of your wishes. It tells the trustee of your fund who you’d like your entitlements to be paid to in the event of your death, but it doesn’t compel them to follow your wishes.  The Trustee will take into account any wishes expressed by you, but ultimately decide who to make payment to in accordance with the rules of the fund and relevant laws at the time.
  • A binding death benefit nomination. As the name suggests, this type of nomination is binding on the Trustee of the superannuation fund and does not give them any discretion in the payment, provided the nomination is valid. In order for a nomination to be binding it must be valid.  To be valid it must be in writing, signed, witnessed by two adult witnesses, sent to the Trustee and the beneficiary/s nominated must be any of the following: your partner/spouse, children, your Legal Personal Representative, someone financially dependant on you or someone who is in an interdependent relationship with you.  Once made, your nomination will be valid for 3 years from the date it’s signed, or it may be non-lapsing depending on the rules of the superfund.

Why should I make a binding death benefit nomination?

If you have a blended family or intend to pay your superannuation entitlements to different eligible beneficiaries in different proportions, a binding death benefit nomination will give you the peace of mind of knowing your estate planning intentions will be adhered to.

When wouldn’t I make a binding death benefit nomination?

• Where certainty already exists about the payment of entitlements. For example a client with a spouse but no children. In those circumstances there may be little value in completing a binding death benefit nomination for a sole dependant as the funds are going to be paid to the dependant on death.
• Where a client wishes for the Trustee of their fund (typically a Self Managed Superannuation Fund) to maintain some flexibility in structuring any death benefit payments on death.

If you would like to discuss anything further about estate planning or superannuation death benefit nominations, please contact Genevieve Knight on 9612 7295.