Our Gold Coast superannuation lawyers are here to help you.
Your superannuation is likely one of your largest personal assets.
But, unlike your other assets, your superannuation may not be covered by your Will.
When you pass away, the last thing you want is for your super death benefit to be paid contrary to your wishes.
That’s why you need the right estate planning arrangements in place.
For over 65 years, we’ve been helping Gold Coasters put in place effective estate plans to the future they deserve.
Our experienced Gold Coast superannuation lawyers will help you navigate the complexities of trust deeds and super law, so you can feel secure knowing that your legacy is protected.
Book A Consultation Today
Superannuation in Australia
Superannuation (also known as ‘super’) is often one of the largest assets held by the average Australian after their home. Currently, all employees receive 10% of their annual income in the form of compulsory super contributions from their employer.
Similarly, self-managed super funds (SMSFs) comprise nearly one-third of Australia’s $2.76 trillion in retirement savings.
Your Superannuation Death Benefits
Many Australians believe that your superannuation is automatically distributed to the beneficiaries under your Will.
This can occur, but, if you do not have a valid binding death benefit nomination in place, the trustee of your super fund may use their discretion to instead pay your super to any of your other super dependants, including your spouse, children, interdependents (someone who lives with you and shares a close personal relationship where one or both of you provide financial and domestic support and personal care), or other financial dependants.
The trustee of your super fund does not have to follow any non-binding nomination, nor the wishes set out in your Will.
The only way to guarantee that your super is distributed in accordance with your wishes is to put in place a binding death benefit nomination to clearly set out your wishes.
What is a binding death benefit nomination?
A binding death benefit nomination is a legally binding directive from a person to their superannuation trustee that states how they want their super death benefit to be distributed when they die. This directive can include any insurance benefits you have.
Importantly, though, a binding death benefit nomination shouldn’t be made in isolation. It needs to coordinate with your larger estate plan, or your estate will be at risk of unintended financial and personal consequences.
As part of your estate planning, we’ll work with you to review:
- the recency and completeness of any existing binding death benefit nominations;
- your enduring power of attorney (which can be important for binding death benefit nominations if you lose decision-making capacity);
- the compliance of your SMSF trust deed (if you have one); and
- many other aspects of your estate planning structure.
To move forward with making or updating a binding death benefit nomination, schedule a meeting with one of our Gold Coast superannuation lawyers via our contact form.
Binding Death Benefit Nomination Tax Implications
When considering your super death benefit nomination, you should think about your preferred nominee and any tax implications.
Some family members can receive your super tax-free, whereas other beneficiaries may need to pay substantial tax on any benefit received. To minimise the tax your estate or your chosen super death benefit beneficiary will pay on your super death benefit, we recommend that financial advice be obtained.
Self-Managed Super Funds
While there is more flexibility with superannuation arrangements in SMSFs, there are also very strict legislative compliance requirements. A failure, even accidental, to meet these strict requirements can potentially cause the SMSF to become non-compliant, which can lead to extremely adverse consequences.
This is especially the case if the SMSF’s documents (or even the documents of an SMSF’s corporate trustee) are older and have not been kept up to date, or if one of the members of an SMSF passes away or loses their ability to make decisions without putting in place measures to ensure continuity in the SMSF.
How can you plan for the future?
Bell Legal Group’s Gold Coast superannuation lawyers can provide advice about the preparation of binding death benefit nominations and review the governing documents of your self-managed super fund to ensure eligibility and continuity of the fund, as well as to ensure that your superannuation benefits go to the people you choose.
If you need help with your superannuation or your self-managed super fund, please contact our experienced team at Bell Legal Group by calling us on 07 5597 3366, sending an email to firstname.lastname@example.org, or filling in our contact form.
Does a binding death benefit nomination override a Will?
Yes, provided that your nomination remains valid.
Without a binding death benefit nomination, the trustee of your super fund can pay out your super death benefit to any of your super beneficiaries, even if you don’t want them to get paid. If you do not have a valid binding death benefit nomination in place, any wishes or instructions you put in your Will about paying out your super death benefit aren’t legally binding, which may result in your super fund trustee not following your wishes.
A binding death benefit nomination, on the other hand, provides clear instructions for how your super death benefit gets paid out, and the trustee of your super fund is legally obliged to follow it. You can nominate your legal personal representative (the executor of your estate) to receive your super death benefit. They will then distribute your super in accordance with your Will.
How long does a binding death benefit nomination last?
A binding death benefit nomination isn’t permanent. Nominations are generally valid for a maximum of three years, after which time they lapse and need to be renewed. Be aware that three years is the maximum – your binding death benefit nomination could be valid for less time, so make sure you discuss timeframes with your lawyer.
The exception to this is a non-lapsing binding death benefit nomination, which can last indefinitely. Not all superannuation funds provide this option.
Who can receive a binding death benefit nomination?
Any of your super dependants can receive a binding death benefit payment. Super dependants include:
- your spouse;
- your children, including any stepchildren and adopted children;
- any person you have an interdependency relationship with.
You are in an interdependency relationship with someone if you have a close personal relationship, live together, either of you provides the other with financial support, and either of you provides the other with domestic support and personal care.
You can also nominate your legal representative (the executor of your estate) to receive your super. They will then distribute your super in accordance with your Will.
Can a binding death nomination be challenged?
A binding death benefit nomination can be challenged – but not because it’s unfair or ‘wrong’.
A nomination can only be challenged on the basis of its validity. A nomination can be invalid if:
- the person making the nomination lacked decision-making capacity at the time;
- if the super fund trust deed doesn’t permit that type of nomination;
- if the nomination has expired and has not been renewed; or
- if the nomination isn’t signed, witnessed or dated correctly.
To ensure that your binding death benefit nomination is validly executed, schedule a meeting with one of our experienced superannuation lawyers.
What is a non-lapsing binding death benefit nomination?
A non-lapsing binding death benefit nomination remains in place unless you cancel or replace it with a new nomination. This differs from a lapsing nomination, which is generally valid for three years from the date that it was put in place, and must be renewed after it lapses so that your wishes remain binding.
Before making a non-lapsing binding death benefit nomination, you need to check with your super fund to make sure the fund rules allow a non-lapsing nomination.
What is the difference between reversionary and binding nomination?
Nominating a reversionary beneficiary means that your nominee will continue to receive your super pension when you die (rather than being paid your super death benefit in a lump sum). Often, funds will only allow you to nominate your spouse as your reversionary beneficiary.