Who Gets Your Super When You Die?

When you pass away, your superannuation doesn’t just disappear. It usually gets paid out as a lump sum or a series of regular payments, known as an income stream, to a dependant. This is referred to as the 'super death benefit'.

Nominating a Beneficiary

To have control over where your super goes after you die, it's essential to nominate a beneficiary. If you don't make a nomination, or if you make a non-binding nomination, the trustee of your super fund will decide who receives your super. To ensure your wishes are followed precisely, you should submit a binding death benefit nomination.

What is a Binding Nomination?

A binding nomination is a legally binding instruction to your super fund, specifying who should receive your super death benefit. As long as the nomination is valid and follows the rules, the super fund must pay your super to the nominated person or people. To be valid, the nomination must be in writing and witnessed by two people over 18 who are not nominated as beneficiaries.

What is a Non-Binding Nomination?

A non-binding nomination indicates your preference for who should receive your super, but it is not legally binding. The super fund trustee will consider your wishes but has the discretion to distribute your super to other dependants or your legal personal representative based on the circumstances at the time of your death.

No Nomination: What Happens?

If you haven't nominated anyone, the trustee of your super fund will decide who receives your super death benefit. Typically, the super will be paid to your dependants. If there are no dependants, the super may be paid to your legal personal representative.

Who is Considered a Dependant?

Under superannuation law, your dependants can include:

• Your spouse or de facto partner.

• Your children, regardless of their age.

• Someone in an interdependency relationship with you, which means you have a close, personal relationship, live together, and provide financial and domestic support to each other.

Leaving Your Super to Non-Dependants

If you wish to leave your super to someone who isn’t classified as a dependant, you should make a binding nomination to your legal personal representative. Then, specify in your will how the super should be distributed.

Tax Implications

Unless the beneficiary is your dependant and receives the super as a lump sum, they will generally have to pay tax on the super death benefit. The amount of tax depends on the relationship with the beneficiary and the nature of the payment.

What If You Have Children?

If you've nominated your children as your binding beneficiaries, they will receive your super when you die. If not, the trustee will decide who receives the super, taking into account relevant laws and the needs of your dependants.

What If You Have a Partner?

The same rules apply. If your partner is a binding beneficiary, they will receive your super. Without a binding nomination, the trustee has the discretion to decide based on relevant laws and the needs of your dependants.

How to Nominate Your Beneficiaries

To nominate beneficiaries, you need to contact your super fund and submit the necessary forms. It’s a straightforward process, but one that requires careful consideration to ensure your wishes are followed.

Choosing a Beneficiary: A Key Decision for Your Future

Your superannuation is a significant investment for your future. It's your money, earned through hard work, and deciding who should receive it after you pass away is a crucial decision. Here's a guide to help you navigate this important choice:

Why You Should Nominate a Beneficiary

Nominating a beneficiary provides clarity and avoids potential disputes among your loved ones. Super and any associated insurance benefits are not considered part of your estate, as they are held in trust until you can access them. By nominating a beneficiary, you can specify exactly who should receive your super, ensuring your wishes are respected.

Who You Can Nominate

You can nominate:

• Your spouse or de facto partner.

• One or more of your children.

• Interdependents (someone who lives with you and provides mutual support).

• Other financial dependants (someone who relies on you financially).

• Your legal personal representative.

Types of Nominations

1. Binding Nomination: Legally obliges your super fund to pay your super to your nominated beneficiary, provided the nomination is valid and in force at the time of your death.

2. Non-Binding Nomination: Indicates your preference, but the trustee makes the final decision.

3. Reversionary Nomination: For retirement account holders, allows regular income payments to continue to a nominated beneficiary after your death.

Tax Considerations

The tax implications for super death benefits can be complex. If the beneficiary is a financial dependant, they may receive the benefit tax-free. Non-dependants, such as financially independent adult children, might need to pay tax on the benefit. The form of the payment (lump sum or income stream) also affects the tax treatment.

Updating Your Nominations

It’s essential to keep your nominations up to date, especially after significant life events such as marriage, divorce, or the birth of a child. Regularly reviewing your beneficiaries ensures your super will be distributed according to your current wishes.

Seeking Professional Advice

Superannuation laws and tax rules can be intricate. Seeking advice from a financial advisor can help you navigate these complexities and make informed decisions about your super.

Deciding who gets your super when you die is an important aspect of your financial planning. By understanding your options and making informed decisions, you can ensure that your superannuation benefits are distributed according to your wishes, providing peace of mind for you and your loved ones. If you need help or have questions, contact your super fund or a financial advisor to guide you through the process.