Not so Super
Increasingly we are finding that superannuation is likely to be the most significant asset a person owns, often overtaking the family home as the most valuable asset that forms the bulk of a person’s estate after their death.
However, many people are not aware that their superannuation does not usually form part of their estate when they die and that it therefore cannot be given away via their Will. There are extra, separate steps that must be taken as part of the estate planning process to direct where a superannuation balance is paid after a person’s death.
Australian superannuation law states that a person may make a death benefit nomination (“DBN”) to their super fund to nominate the person to receive their super and other death benefit entitlements once they pass away.
The superannuation law also sets out very specific rules around how a DBN is made so it is important that the nomination is completed correctly.
If a DBN has not been made or has not been properly made, then the trustee of the super fund often has the ultimate discretion to choose who to pay your super entitlements to. This may not accord with your wishes and we encounter many deceased estates with this kind of problem.
Here are some of the important points we find our clients need to know about DBN’s when we are discussing their estate planning:
- You super can only be given to a ‘dependant’ as defined by the superannuation law (eg spouse, de facto, child or another person financially dependent upon you) or your estate (if you have nominated the estate as the beneficiary).
- If you wish for a parent, friend or sibling to receive your super then other arrangements need to be made and you should seek proper advice.
- Very confusingly, a DBN can often be made as:
- “Binding”: where the super fund must pay the nominated person (if the nomination is validly made). These nominations usually expire after 3 years and must be refreshed.
- “Non-binding”: where you are simply telling the fund who you wish to be considered for a payment.
- “Non-lapsing”: some funds will allow for a binding DBN to be made that does not lapse. This depends on the rules of the particular fund.
- Binding DBN’s must be made in writing and signed and witnessed in front of 2 witnesses over the age of 18 who are not the beneficiaries of the superannuation.
- A DBN made online is only a non- binding nomination.
In the case of self-managed superannuation, some of the above rules do not apply and specialist advice is necessary to ensure that your wishes are properly followed after your death.
If you have any questions about your superannuation, how it is dealt with as part of your estate planning or you wish to check on the arrangements you have in place already please contact us.
A good estate planning lawyer will dedicate a part of every estate planning consultation to discussing the requirements for a person’s superannuation to be left according to their wishes. At Lynn & Brown Lawyers we are experienced in providing you the advice you need to ensure that your hard earned super is left to the right people and that your estate is not complicated by small errors that can be easily fixed during your lifetime.
About the authors:
After completing a double degree Bachelor of Arts (Politics and International Relations) and a Bachelor of Law, Matthew was admitted into the Supreme Court of Western Australia in 2016. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.
