Ensure your superannuation will be paid to your beneficiaries

Binding nominations in superannuation funds

Australians continue to build their personal wealth in superannuation. However, despite this, many Australians do not have a complete understanding of what can and will happen to their superannuation when they pass away.

As part of your estate planning, it is important to consider making a binding death benefit nomination so that your superannuation wealth, and the proceeds of any related insurance policies, will be distributed in accordance with your wishes.   

What is a binding death benefit nomination and why do I need one?

A binding death benefit nomination is a legal document that requires that the trustee of your superannuation fund to distribute your death benefit to your nominated beneficiaries. Without a binding death benefit nomination, your death benefit could be paid to your dependents, next of kin or to your estate – not necessarily as you specifically direct.

It’s important to know who will be in charge of deciding who gets your superannuation and any life insurance held within it. The person who will make this decision is:

AssetWho makes the decision?Notes
Superannuation – where you make no nomination.The trustee of the fund.This can produce an unsatisfactory result.
Superannuation – where you make an (advisory) non-binding nomination.The trustee of the fund, but with reference to your nomination.The trustee can ignore the advisory nomination – this can produce an unsatisfactory result.
Superannuation – where you make a binding nomination.You, through your binding nomination.You retain absolute control.
Life policy – within superannuationAs above, depending on whether or not you have made a binding nomination.The proceeds form part of the superannuation fund.

Having a valid and binding death benefit nomination in place provides certainty for you and your family about who is going to benefit from your superannuation and any associated insurance. It also assists in how quickly your superannuation fund can distribute the funds.

How do I make a binding death benefit nomination?

In order for a nomination to be binding it must be ‘valid’. In order to be valid, the nomination must be:-

  1. Must be in writing, usually in the form required by your particular superannuation fund.
  2. Must be signed and witnessed by 2 adult witnesses that are not beneficiaries.
  3. Must nominate a beneficiary who is a dependant.
  4. Be sent to the trustee of the superannuation fund.

Who can I nominate?

Only a ‘dependant’ can be nominated. A dependant in superannuation legislation means:-

  • a spouse or de facto partner
  • children
  • anyone who is in a financially dependent relationship with you
  • any person who is an interdependent relationship with you
  • a legal personal representative.

Your children can be appointed even if they are not adults at the time when you are making your nomination.

Can I do it myself, or can you help?

Doing the paperwork and signing the forms is not necessarily difficult – but it is important to have a complete understanding of your specific circumstances and your whole estate plan when making the decision about who to nominate, or even whether a binding death benefit nomination is appropriate for you.

In some circumstances, it may be better not to have a binding death benefit nomination in place. For example, if you have a binding death benefit nomination in place appointing your spouse, even if you separate prior to your passing, your superannuation will flow to them, even though they are now your ex-partner. A non-binding nomination gives the trustee the discretion to take into account changing circumstances.

Making binding nominations

Your superannuation wealth is treated differently from other assets and may not be covered by your will. Therefore, it’s important to seek professional advice and to make a comprehensive estate plan. By taking the time to do this, you can ensure that your assets are distributed according to your wishes and provide financial security for your loved ones.

Have you considered superannuation in your Will?

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At Mason Lawyers, when someone is ready to make a Will, we consider a person’s unique circumstances on a case-by-case basis. A person’s estate can be small or large, complex or straightforward. Similarly, a person can have a very small family or a large and complicated family. These factors, as well as any insurance considerations or potential disputes, are considered when making an individualised estate plan.  Our experienced estate planning lawyers can help you make a Will. 

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