Protecting our loved ones is something we all care about, but when it comes to financial security, your family may not be as safe as you think. Stu Varidel, Principal Adviser of Heart Financial Advisers highlights the importance of nominating your superannuation beneficiary.
What is a Will?
A Will is defined as a legal document that indicates how a person wants their finances, property and possessions to be distributed after their death. With that in mind, it’s easy to assume a Will is all that’s needed to ensure your estate is divided up exactly as you want.
However, what’s not always covered under a Will is superannuation – the account where many Australian’s hold the majority of their savings. As we’ve seen in the news recently, things can take a seriously wrong turn when super isn’t taken into account.
What can happen?
Thomas was a public servant who passed away unexpectedly at just 37 years old, tragically leaving behind two young sons aged 4 and 1.
Like many, Thomas had built up a healthy amount of retirement savings and life insurance in his superannuation fund. So, after years of public service paired with the fact that he chose to keep Samantha (his ex-partner and mother of his sons) as the executor and sole beneficiary of his Will. Even after their separation, Thomas’s family was confident that his sons would be looked after.
To their disbelief, a woman who Thomas had been living with in a relatively new defacto relationship for less than six months won a claim with his super and was awarded 80% of Thomas’s estate – despite no mention of the woman in his Will.
Can this happen to me?
Thomas believed he had his ducks in a row. He had taken steps he believed would ensure the financial future of his children, and kept his Samantha (ex-partner) listed as the sole beneficiary because he knew that all of the money would be put towards their upbringing.
The fact that this could happen to him, even with a legally binding Will in place, highlights that it really can happen to anyone who doesn’t have a sound understanding of the relevant legislation – or advice from someone who does.
How can I protect my family?
Firstly, it’s imperative that you have a clear and up to date Will. Secondly, you need to ensure your superannuation fund has a valid binding nomination of a beneficiary in place at all times.
A binding nomination means that the superannuation trustee must distribute your funds exactly as you have requested. Most super funds will require you to list these requests in writing and renew them every three years.
Tread with caution when it comes to non-binding nominations, as these are only considered “preferred” beneficiaries. This means that ultimately the trustees will still make the final decision. Not all Super Fund are the same and this article highlights that it is not only the returns, cost that are important but also how they treat your estate planning needs. Remember not all Super Funds are equal!
Seek advice for your peace of mind.
This information is current as at 20/10/17
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