Your ‘death benefit’ includes the money in your superannuation account plus any life insurance cover you have through your super fund as at your date of death.
Death benefits are not estate assets (don’t form part of your estate upon your death) and therefore usually cannot be dealt with in your Will. It is the Trustee of your super fund who decides who will benefit from your death benefits when you die. Whilst you can provide guidance to the Trustee in the form of a Non-Binding Death Benefit Nomination, the Trustee still retains the discretion as to who will benefit.
Where your Superannuation Fund allows, you can make a Binding Death Benefit Nomination. Trustees must comply with valid Binding Death Benefit Nominations. Binding Death Benefit Nominations only last for 3 years so it is important to make a fresh nominate every 3 years to ensure your Trustee is bound to follow your nomination.
Some Superannuation Funds allow Non-Lapsing Bending Death Benefits Nominations, which do not lapse after 3 years. It is important to review these regularly to ensure that they always accurately reflect your wishes.
Valid Non-Binding and Binding Death Benefit Nominations (including Non-Lapsing Nominations) can only nominate persons who are superannuation dependants (as defined by Superannuation Law), or your estate.
Your superannuation dependants include:
- your spouse (this includes a same-sex de facto partner)
- your child or children (of any age)
- someone who is financially dependent on you at the time of your death
- someone with whom you had an interdependent relationship at the time of your death.
The above relates to lump sum payments and more restrictions apply to who can benefit by a pension.
Tax considerations are important and such issues should be carefully considered when deciding who you should nominate as your death benefit nominee.
Call Fleur Craig at Armour-Craig Legal on (03) 5636 4986.