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Binding Nominations & Estate Planning

Many people are not aware their superannuation is not an estate asset and therefore, not automatically covered by their Will.

Superannuation funds are governed by the Superannuation Industry (Supervision) Act 1993 (Cth) “the Act” and Superannuation Industry (Supervision) Regulations 1994 (Cth) “the Regulations”, and the terms of the relevant trust deed under which they are established.

Superannuation will not be distributed by your Will unless:

  • The trustees of your particular super fund decide to pay your death benefits to the executors of your estate; or

  • You have a binding death benefit nomination with your superannuation fund to pay the funds into your estate; and

  • Your Will deals with your superannuation.

How you decide to distribute your superannuation death benefits is a personal matter, however only certain people are eligible to receive superannuation death benefits.

You can nominate your:

  • dependents; or

  • legal personal representative (the executor of your estate).

A “dependent” in relation to a person includes:

  • the spouse of the person,

  • any child of the person; and

  • any person with whom the person has an interdependency relationship.

There can be significant strategic advantages from taxation and asset protection perspectives in distributing your superannuation in a certain manner, depending on the intended beneficiaries and your individual or family circumstances. In other cases, there can also be strategies that will mean flexibility is to be kept so no nomination is made.

To ensure any nomination you make is followed, you must have a binding death benefit nomination which complies with the terms of the Act, the Regulations and your superannuation fund trust deed. Specifically a binding nomination must be in writing, witnessed by two people over the age of 18 (who are not mentioned in the nomination) and updated every three years;

Tips for getting it right:

  • obtain expert financial advice about your estate plan and potential nomination.

  • determine if a binding death benefit nomination is the right tool for your estate plan.

  • when completing binding death benefit nominations, ensure the documents and any other necessary material complies with the legislation and fund rules.

  • ensure any lapsing nominations are kept up to date.

  • regularly review your estate plan, including your super, to ensure that it continues to reflect your wishes

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