Estate Planning & Superannuation

Estate Planning & Superannuation: How do you ensure your super will go to your chosen beneficiaries?

A little-known fact about estate planning and Will preparation is that your superannuation doesn’t form part of your estate when you pass away. It’s subject to specific rules within the Superannuation Industry (Supervision) Act, and super funds are required to follow these rules when determining who will receive a superannuation death benefit following a member’s death.So, how can you make sure your wishes are respected and your super is distributed the way you intend?

It all starts with Estate Planning

Estate Planning is about more than just writing a Will. Primarily, it’s the process of developing strategies and documenting your wishes for the transfer of assets and wealth in the event of your death. But it doesn’t just focus on asset distribution. It also gives you the opportunity to consider the way you want decisions made on your behalf if you no longer have the capacity to do so.We know it can be an uncomfortable subject. No one likes to talk about death and dying but proactive planning now means that decisions are made in a considered and deliberate way. And it can alleviate the future stress and financial burden for family members in a time of grief. You can read more about Estate Planning here.Superannuation is one part of the estate planning process and specific action needs to be taken separately to ensure your superannuation benefits go to who you intended.

Your Will doesn’t cover Superannuation

With Superannuation being the second largest asset class of household wealth, this is one part of estate planning that you need to get right.Superannuation Law has specific guidelines on who superannuation benefits can be distributed to, and how they are distributed, after someone dies. And because super doesn’t form part of your estate, it isn’t distributed based on the intentions in your will.Most complying super funds will require a Death Benefit Nomination that outlines your chosen beneficiary for any death benefit payout. The beneficiary you choose will need to meet the legislation requirements. Because there may be taxation implications for the person receiving your bequest, it’s vital that these decisions are made as part of a holistic estate planning process with a qualified advisor.

Types of Death Benefit Nominations

There are several types of death benefit nominations you can use when advising your super fund of how you’d like your super distributed. The one you’ll choose will be dependent upon your personal situation and your particular super fund as some super funds do not offer all types of beneficiary nominations.It’s important to note that without a binding death benefit nomination, your super fund will make a decision as to where your superannuation death benefit will go. Even if you feel you have adequately allowed for it in the detail of your will.

Binding Nomination

A Binding Death Benefit Nomination allows you to choose who you wish your superannuation to be paid to when you die. A Binding Lapsing Nomination is only valid for three years, so you will need to provide your super fund with a replacement at expiry to ensure your wishes will still be met. You can amend or cancel this type of nomination at any time by completing the appropriate forms. Because your super fund is bound to distribute any benefits based on your nomination, you should review the details if your situation changes.

Non-Lapsing Binding Nomination

A non-lapsing binding death benefit nomination acts in the same way as the lapsing nomination, however this is one that won’t expire. The beneficiaries remain current until you make an amendment or cancel the nomination, these are not common with retail or industry Super Funds.

Non-Binding Death Benefit Nomination

A non-binding death benefit nomination still allows you to nominate your chosen beneficiaries, however the trustee of your super fund isn’t legally obligated to distribute funds in accordance with these directions. The Super Fund Trustee will consider the beneficiaries nominated, but also take your personal circumstances into account when making their final decision.

Who are superannuation death benefits paid to?

A super fund can only pay the death benefit to your personal legal representative (meaning your estate) or a person who is classed as one of your dependents as outlined in the legislation. Suitable beneficiaries may include;

• Your spouse (Including same-sex and de facto)
• Your child (Including adopted child, step child, or child of your spouse)
• Anyone deemed to be financially dependent on you
• Any person in an interdependent relationship with you

You can read more about dependents here.If you choose for your death benefit to be paid to your personal legal representative (usually an executor of your estate), it will then form part of your estate and be distributed as per the intentions in your will. However, you still need to complete the Binding Nomination to choose this option.[caption id="attachment_16858" align="aligncenter" width="560"]

Estate planning to ensure superannuation goes to your chosen beneficiaries[/caption]

Steps to ensure your superannuation benefits go to the right beneficiaries

• Review your Estate Planning with a qualified advisor
• Check your super fund can accept binding nominations. Complete and submit the Binding Death Benefit Nomination required by your super fund
• Ensure the person/s you have chosen is an eligible beneficiary
• Update or review your plan if family circumstances change
• Remember that a Binding Death Benefit Nomination expires after three years and a new one will need to be completed

Taking a holistic position while planning for your future will always ensure that our advice fully encompasses every aspect of your life. At Modoras, our expertise from business advice through to estate planning means you have the best opportunity to get the advice that’s right for you.

Take the first step toward protecting super inheritances for your loved ones. Make an appointment to review your superannuation and estate planning today.

Call us to discuss your Estate Planning considerations on 1 300 272 829.

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.