Written by Aaron Alston – Financial Adviser
Many people are living blissfully unaware that their superannuation death benefit may not be valid when they pass away. It is very important to review your nominations to ensure they are up to date.
There are generally 3 types of death nominations inside super:
- Binding Non-Lapsing nomination
- Binding-Lapsing nomination
- Non-Binding nomination
Note: For superannuation benefits moved to a retirement income stream (pension) you are also able to nominate a reversionary pension. This topic requires a separate article so will be addressed at a later stage.
A Binding Non-Lapsing death benefit nomination does not expire. The trustee will pay the funds to your nominated beneficiary as long as the nomination is valid and an allowable person nominated (i.e. spouse, children, legal personal representative).
The nomination may become non-binding however if you fall into one of the following categories: recently married, enter a defacto relationship, permanently separate from your spouse/partner or have child with someone other than your partner.
A Binding-Lapsing nomination is binding as above and is valid for period of up to 3 years after the date of signature. For the nomination to remain current you must confirm the nomination in writing before the end of every 3 years.
A Non-Binding nomination does not expire. The trustee of the superannuation fund will consider your nomination but have the discretion as to who to pay the fund to. This allows a person who you have not nominated or may have only partially nominated to petition the trustees for a different benefit than you have nominated. IF YOUR SUPERANNUATION ACCOUNT SAYS NON-BINDING, I WOULD REVIEW ASAP.
Who You Can Nominate
Individual: Your superannuation will paid to the individual/s you nominate providing your nomination is valid. A valid nomination is your spouse, child, any person in a interdependent relationship with you and any other person the trustee consider was dependant on you at the time of death.
Legal Personal Representative: Your superannuation (including life insurance proceeds) will be paid to your estate and be distributed in accordance with your will. Your will however may be contested and if you die without a valid will, there may be significant delays and costs involved.
The above information is general information only and does not take into account your financial situation, circumstances and needs. If you wish to review the above along with your holistic estate planning needs you should speak with your solicitor or alternatively Hudson can refer you to one.