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Who gets my superannuation when I die?

The answer to this question and whether you have a say depends on which fund your superannuation is with and the rules of the fund. Interestingly, sometimes you do not get a say in who gets your superannuation when you die.

By Brendan Cockerill, Senior Associate – Business and Succession

Given the rapid increase in the amount of money people have invested in superannuation, and the fact that many superannuation funds include an element of life insurance on the life of the member, superannuation is an important part of your estate planning.

CAN MY WILL SAY WHO GETS MY SUPERANNUATION?

In most cases you cannot directly leave your superannuation death benefits, which will include the proceeds of any life insurance policy on your life, under the terms of your will. The exception is if you are a member of a Self Managed Superannuation Fund (SMSF) and the Deed setting out the rules for the SMSF specifically state that a member can give a binding direction in their will setting out who receives their superannuation benefits on their death. Such Deeds exist, but are the exception not the rule.

You can also indirectly leave your superannuation death benefits under the terms of your Will if the superannuation death benefits are first paid into your estate. Whether your superannuation death benefits can or will be paid to your estate depends on your fund.

DO I HAVE ANY SAY AT ALL WHO GETS MY SUPERANNUATION?

Under the terms of many public sector funds, such as CSS, PSS and MSBS, you do not have the option of nominating a beneficiary. The rules of the fund determine who receives your superannuation death benefits. This will generally be your spouse and/or your eligible children and if you do not have a spouse or any eligible children the death benefits will be paid to your estate. This can be particularly problematic for people in second relationships with children from their first relationship.

One often overlooked and misunderstood aspect of SMSFs is the requirement that the members must always, either directly or indirectly, have input into the management and control of their SMSF, in order to be eligible for the generous tax concessions available to superannuation funds.

Under the terms of most industry and retail superannuation funds you are able to nominate who you want to receive your superannuation death benefits when you die. These can generally be in the form of a preferred nomination, which is not binding on the trustee, or a binding nomination. In most One often overlooked and misunderstood aspect of SMSFs is the requirement that the members must always, either directly or indirectly, have input into the management and control of their SMSF, in order to be eligible for the generous tax concessions available to superannuation funds. cases binding nominations must be updated every three years for them to remain binding on the trustee.

Under the terms of most SMSF deeds you can nominate who you want to receive your superannuation death benefits when you die. These can be binding or non binding and in many cases the nomination does not need to be updated every three years to remain binding, however, the rules of the fund need to be checked to be sure.

In all cases where you can make a nomination you can only choose to leave your superannuation death benefits to your spouse, your children, any other dependants or your estate. If you want your superannuation to go to a person who is not your spouse, child, or a dependant, you must first ensure your superannuation goes to your estate and then deal with it in your Will.

If you do not take the opportunity to nominate a beneficiary, it is the trustee of the fund who has the discretion to decide who to pay your superannuation death benefits to. Is that what you really want?

In the case of a SMSF, and in the absence of any binding nomination, it is the trustee of a SMSF who decides who to pay superannuation death benefits to and as a result it is very important that you think about control of the SMSF after you die.

If you have any queries please contact a member of our estate planning team.

18 Kendall Lane, New Acton

Tel: (02) 6212 7600

[email protected]

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