What Happens to My Superannuation When I Die?

Every Australian has superannuation; however, not every Australian has a plan to ensure that this superannuation is given to their loved ones in the event of their death. It may surprise you to learn that your loved ones are not entitled to your superannuation benefits, including any life insurance owned via superannuation. If you would like your superannuation to be included in your estate and distributed in accordance with the terms of your Will, then you need to make a ‘binding death benefit nomination’.

What is a binding death benefit nomination?

A binding death benefit nomination is a form addressed to the trustee of your super fund that specifies how you would like your superannuation benefits to be distributed upon your death. It is a legally binding form, meaning that your superannuation trustee cannot override your instructions and must direct your superannuation benefits in accordance with your wishes. A binding death benefit nomination form specifies the person(s) you wish to benefit (called ‘beneficiaries’) and the percentage of the benefit you would like them to receive. For example, you may choose to make a binding death benefit nomination in favour of your spouse so that they receive 100% of the benefit in the event of your death. 

Superannuation and Wills

Alternatively, if you would like your superannuation benefits to be treated as part of your estate, you may choose to make a binding death benefit nomination directing the full benefit to your Legal Personal Representative (the executor of your Will). This direction will link your superannuation to your estate to be distributed by your Will and has particular advantages and tax implications if you want your superannuation benefits to be held in a testamentary trust. 

What happens if I don’t have a binding death benefit nomination?

In the event that you die without a valid binding death benefit nomination, your superannuation trustee will have complete discretion regarding the distribution of your superannuation benefits. Their decision may not benefit your first preference, or align with your values; therefore, a binding death benefit nomination can give you greater testamentary control over your assets. 

What if I already have a binding death benefit nomination?

It is important to note that many binding death benefit nominations expire after a period of time (usually three years). At The Estate Planning Centre, our estate planning lawyers can review your current binding death benefit nomination to ensure that it remains valid and can help you make a non-lapsing nomination, giving you the peace of mind that comes with having an enduring estate plan. 

How do I make a binding death benefit nomination?

Every superannuation trustee has a different process and form for making a binding death benefit nomination. At The Estate Planning Centre, we prepare this form with you as an important part of your estate plan, and liaise with your accountant and financial planner to ensure that your nomination is best suited to your circumstances. 

Ready to prepare an estate plan? We are here to help you create a meaningful and effective estate plan. Contact us at The Estate Planning Centre (office@theestateplanningcentre.com.au) or make an online booking using this link to arrange a consult with one of our estate planning lawyers.

By Jaime Dunn