Who should read this eBrief

  • Anyone with superannuation (Super)
  • Individuals who are single or in a new relationship
  • Individuals in a blended family

Your Super doesn’t always get distributed in accordance with your Will

Most people assume that their Super will be paid to whoever they have left their assets to in their Will. However, this is not always the case – so be careful!

What is a Super death benefit?

A Super death benefit is the total amount of money paid by the trustee of your Super fund after your death and includes your Super account balance plus life insurance payout if relevant.

Who is entitled to your Super death benefit payment?

By law, your Super can only be paid to someone who qualifies as a dependant (which includes your legal personal representative, i.e. the executor nominated in accordance with your Will).

What happens to Super when you die? Can you choose who your Super gets paid to?

The trustee of the Super fund generally has discretion as to who they pay the funds to unless there is a binding nomination in place.

  • If you have no nomination in place, this could result in your Super being given to someone who you do not want to receive it.  For example – the definition of a Super dependant may include a new partner you have just moved in with.  If they make a claim and you haven’t made a nomination, they may be successful in getting your Super.
  • Payment to the wrong person could also result in a hefty tax bill, which could be avoided by nominating the right beneficiary.
  • Please contact us if you would like to discuss the various nominations that you can make to remove the trustee’s discretion.

If you nominate a non-Super dependant to receive your Super – the nomination will fail.

  • For example – you can’t nominate your siblings directly.  Super funds often don’t let you know that you have made an invalid nomination.  Your family doesn’t find out until after your death, and the nomination fails.

There may be tax implications on your Super payments

Qualifying as a Super dependant does not mean that a person will also be entitled to obtain tax concessions on your Super death benefit.  Careful consideration needs to be given when you nominate who gets your Super, as the tax consequences could be significant.

What does this mean for you?

  • Don’t assume that your Super will be paid as directed in your Will.
  • Consider your circumstances.  How do you want your Super distributed?
  • If you are in a blended family, if you are single, if you are in a new relationship, or if you want your Super to go to a particular person, then you need to seek legal advice.

For more information call the Wills & Estates Team:

Tanya Herbertson | Partner
(02) 6279 4444