Consideration should be given to your superannuation as part of your estate and succession plan and it is important that you understand where your superannuation will be paid on your death.
Does Superannuation Pass Under My Will?
Your superannuation is governed by the agreement that you entered into with the trustees of your superannuation fund and the relevant legislation and does not pass under your will unless you have nominated your estate as the ultimate beneficiary to receive your superannuation upon your death.
What Nominations Did I Make?
It may be critical as to how you have nominated a beneficiary with your trustee, noting there are different types of nominations available, being:
- general (non binding) nomination;
- binding nomination; and
- no nomination.
If you have nominated a person by way of a general non-binding nomination to receive your superannuation benefit upon your death or you have made no nomination at all, your superannuation fund need only use this as a guide. They will have the ultimate discretion to determine who receives your superannuation benefits.
You may sign a binding death nomination which is a legally binding nomination and your superannuation trustee will not have discretion to determine who your benefits are to be paid to upon your death. A binding death nomination may be either lapsing or non lapsing and a general binding death nomination will lapse after three (3) years unless it is confirmed, modified or revoked within that time.
A non lapsing binding nomination will not lapse unless it is modified or revoked. The trustee of the super fund is compelled to pay the benefit to your nominated beneficiary as long as they are an eligible dependent at the time of your death.
Who May Be Beneficially Entitled To My Superannuation?
The Superannuation Industry (Supervision) Act (SIS Act) outlines who may receive payment of superannuation on the death of a member. Only a dependent defined under the SIS Act (spouse, de-facto spouse, biological and adopted children, and persons financially dependant on you) or your estate can receive your superannuation on your death.