Ideally that will be up to you!
The trustee of your super fund is the one that will ultimately decide where your money is paid to.
How much influence you have over the trustee’s decision will depend on who you nominate as a beneficiary and what type of nomination you make.
Your Superannuation benefit comprises not only your account balance, but also any insurance benefits you may have. Regardless of how much Super you have, your benefit may be quite substantial and deserves to be treated with the appropriate level of care and attention.
It is vitally important you instruct the trustee of your Super fund who you would like your money to go to in the event of your death. This can easily be done by completing a “nomination of beneficiary” form.
Once the form is completed, the super fund will hold your instructions on file and you will receive confirmation in writing from the trustee that your nomination has been noted.
Who can you nominate?
- Your dependents or legal representatives(s)
- Spouse – a person to whom you are legally married or in a de facto relationship. Gender is irrelevant
- Children – your child (or your spouse’s child) of any age, including an adopted child, foster child, ward or child within the meaning of the Family Law legislation
- Any other person totally or partially financially dependent upon you at the time of your death, or
- Any other person you may have an interdependent relationship or,
- your estate.
There are two types of nominations you can make
Non-Binding Nomination of Beneficiary
Is a statement of your preferences regarding who you would like to receive your superannuation funds when you die. This kind of nomination is not binding on the trustee and is used as more of a guide than a binding legal document. It allows the trustee of the fund to take into account changing personal circumstances. Where certainty is required, the use of a non-binding death benefit nomination is not recommended
Binding Nomination of Beneficiary
This nomination removes all trustee discretion in relation to the distribution of your superannuation assets. In order for the nomination to be valid the following requirements must be met: the beneficiaries nominated must be dependants (as discussed above), the nomination must state the beneficiaries name, relationship to you and percentage of your fund to be distributed to them, the nomination must be witnessed and signed by two adults over 18 (neither of whom can be a nominated beneficiary). It should be noted that a binding death benefit nomination is valid for a period of 3 years (unless otherwise stipulated in the funds trust deed). It is therefore important to ensure you nomination is updated when your circumstances change.
It is important to check if your super fund accepts binding nominations.
How your superannuation benefits are taxed on your death can vary depending on who you nominate and the nominees dependency status
Next week, I will talk about how super benefits are taxed in the event of your death
Corporate Services Specialist
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