It’s a common misunderstanding that your superannuation, like everything else you own, can be dealt with in your Will.
However, superannuation is technically a trust, not a ‘personally held asset’, so it cannot be covered by a Will.
Even if superannuation is specifically referred to in a Will, it does not make it an asset subject to the terms of the Will.
This means it is essential to plan for what happens to your superannuation death benefits to ensure it goes to the people you want it to go to when you die.
In addition, how you structure your estate plan can have significant tax consequences for your estate and beneficiaries.. It’s important to take all of these things into consideration when planning for the distribution of your superannuation death benefits.
Death Benefit planning
Planning what happens to your superannuation benefits after you die is commonly referred to as ‘death benefit planning’. The rules of most superannuation funds mean you can nominate who is to receive your superannuation death benefit.
There are generally two options
DIRECTS WHO THE DEATH BENEFIT
IS TO BE PAID TO AND HOW MUCH
THEY ARE TO RECEIVE
THE TRUSTEE OF THE FUND
IS BOUND TO FOLLOW THE NOMINATION.
|Binding death benefit nomination (BDBN)
|Discretionary death benefit nomination
what happens if there is no nomination?
Without a binding death benefit nomination, how a superannuation death benefit is paid out and to who is entirely up to the trustees of the superannuation fund.
This is particularly important for self-managed super funds (SMSF) where it is common for family members to be trustees of the fund. While trustees will usually respect the guidance provided in the deceased's Will - or pay the death benefit to the estate (which means the executor of the Will has responsibility for distributing it) - there have been numerous cases where instructions set out in a Will have not been followed. When these matters go to Court, it can take a long time for the case to be settled.
get peace of mind with us
Primarily, superannuation is a saving mechanism to ensure you can have a comfortable retirement. However, it’s vital to have a plan for what should happen with all that carefully-saved money should you die earlier than expected.
Without a comprehensive and up-to-date estate plan, children, grandchildren and spouses (or whoever you want to inherit from your estate) can miss out on an inheritance you intended for them – or end up with tax consequences you never intended for them.
Given the complex nature of superannuation and estate planning, the best way to give yourself and your family peace of mind is to draw on the expertise of experienced advisers.
At Equity Trustees, we’ve been helping Australians with their estate planning for more than 130 years, ensuring their wealth is protected and passed on down family generations in accordance with their wishes.
Wills and Estate Planning
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