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Binding Nominations and Protecting Your Family

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.

#superannuation #heartfinancialadvisers #wills


This information is current as at 20/10/17

This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.

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