Have you consider where your super goes when you die?

Have you planned for where your super will go on death?

  • No, I just assumed it goes to my spouse

    Votes: 13 27.7%
  • No, I just assumed it goes according to my will

    Votes: 1 2.1%
  • Yes, I have left instructions in my will

    Votes: 6 12.8%
  • Yes, I have a binding death benefit nomination in place

    Votes: 27 57.4%

  • Total voters
    47
  • Poll closed .
There are an increasing number of court cases involving super death benefits. As super gets larger and large these sort of disputes are expected to increase.
 
I've got a will which whilst simple, is thorough and includes everything of value including super. My super also includes a binding nomination. It all ends up with my wife and my trust after that.

Not that I have much super. Everything is tied up in property and business.
 
I've got a will which whilst simple, is thorough and includes everything of value including super. My super also includes a binding nomination. It all ends up with my wife and my trust after that.

Not that I have much super. Everything is tied up in property and business.
I've always thought super isn't dealt with via a will but only via a binding nomination. Is that true Terry? And I've always thought it stupid that the binding nomination (I think) needs to be updated regularly. What happens if it isn't updated?
 
Yes I have a binding nomination, but then I have always taken a big interest in my superannuation (Weird or What?)

We have also talked with our beneficiaries about the contents of our will.
 
I've always thought super isn't dealt with via a will but only via a binding nomination. Is that true Terry? And I've always thought it stupid that the binding nomination (I think) needs to be updated regularly. What happens if it isn't updated?
I'm no expert, but what if your binding nomination is sitting next to you in the car wreck? I imagine that your will plays a significant role in deciding where it goes under certain circumstances.
 
Wouldn't it then form part of that person's estate to be dealt with as per his/her will?

I recall a file back in my bank days where it took many years to finalise a loan due to having to wait for the courts(?) to decide who died first in a car accident because the order of death changed the outcome of the wills quite drastically. I guess your scenario would likely be similarly problematic.
 
Superannuation is held on trust for its members. Upon the death of a member it is the trustee that decides where the member's benefits are paid. This is subject to the law under the SIS Act which stipulates that a death benefit can only be paid to a member's dependents or to the legal personal representative (which would be the executor if there is a will or the Adminstrator if there is no will).

The trustee must follow the trust deed on this. Most would be broad and say 'dependents'. This leaves a problem because there may be children and there may be a spouse. the children could be from a previous relationship. So in many cases either the spouse gets it and the children miss out or vice versa.

A trustee cannot delegate their decisions - trust law. An exception is if the deed allows it. In these situations where a deed allows it the member can bind the trustee to force them to give the member's death benefits to one or more beneficiaries. Many of the industry or retail funds don't allow this or may allow a lapsing nomination which must be renewed every 3 years.

So it is a good idea to check with your fund trustee to see if you can make a binding nomination.

Even if you can you must make sure that the binding nomination (or BDBN binding death benefit nomination) is actually binding. It must be witnessed by 2 independant witnesses, dated and served on the trustee. (at a trade fair once I met a lawyer who had set up a firm specialising in super. She told me they used to go to people's homes to sign them up etc and do BDBNs. I asked her how did she get 2 witnesses and she said 'what!'. Later in the day I walked back past her stand and she said she looked up the SIS Act and Regs and did not realise they needed 2 witnesses - they had done over 200 of these for existing clients and all were invalid.

The beneficiaries must also be clearly named. There is a recent case from a few weeks ago where a dead lawyer's BDBN was invalid because he nominated the trustee of his estate and not the legal personal representative. His super therefore tell into the wrong hands - or someone other than he intended.

Who should you nominate? I think it is a good idea, in many cases but not all, to nominate the LPR so it goes into your estate and can then be controlled by the will. if you do this then consider having a separate trust in the will to segregate the super so that it can go to the dependents who will have tax concessions.

The downside of it going into the estate is that wills can be invalid or contested. The super may then pass via the intestacy laws or under a court order to someone else. However this can be the case even if the super doesn't go into the estate, especially where there is a connection to NSW.

Any comments in a will are irrelevant to the trustee of a superfund as the trustee cannot take directions from a will.
 
I'm no expert, but what if your binding nomination is sitting next to you in the car wreck? I imagine that your will plays a significant role in deciding where it goes under certain circumstances.
In that case it could go to either
1. Children of the deceased, if there are any, and/or
2. Any person who has an interdependency relationship with the deceased (at the time of their death) and/or
3. To the estate - and then via the will or intestacy laws.
 
I've always thought super isn't dealt with via a will but only via a binding nomination. Is that true Terry? And I've always thought it stupid that the binding nomination (I think) needs to be updated regularly. What happens if it isn't updated?
Some funds don't allow non lapsing nominations. In these cases the person must renew the nomination every 3 years. Not good if you forget and impossible to renew if you are in a coma.

As a safe guard I often encourage people to consider putting specific powers in an enduring power of attorney to allow the attorney to renew a death benefit nomination. But the law is unclear if this would be permissible so it is not guaranteed to work.

it is also a good idea to specifically allow an attorney to withdraw super. Someone who is in an accident and about to die may want the attorney to withdraw all their super (as they meet a condition of release) so that when they die the super will be cash and there could be huge tax savings where there are no children or spouses.
 
Terry - A good post to provoke some discussion. Some replies indicate concerns. More worrying is that many of these post are confidently unaware of the problems.

I'm always surprised by how many people who think their will would address super. IT WONT. In fact, it cant. The super has to be part of the deceased estate for the will to become effective. The will cannot ask for super to be included. If binding or non-binding nominations or trustee discretion is involved there is a very high chance it wont become part of your estate.
eg : A binding nomination says give 100% to Mary (now a former spouse). then Mary may well end up with the super. Or they complete the nomination incorrectly !! (Many forms ask for a % and the Name and DOB of beneficiaries)...The member then fills out with something like :
50% Mary Smith 5/2/87
50% My estate.

The nomination may be invalid. A huge number are incorrectly completed. (eg Does yours say "my deceased estate" or does it say "My legal personal representative" ? Small difference = huge problem. The beneficiary now may have to be determined by the trustee. They may give it all to Mary. Or 100% to the estate. I have seen beneficiaries nominated to include charities too. Totally ineffective and it potentially invalidates the nomination. What does the trust deed say prevails ?? In such cases such a gift should be made in the will and a bulletproof (??) nomination made that ensures the super gets to the estate (or some of it to pay the gift). You don't want a deceased estate depleted by the gift and another beneficiary takes all the super....Leaving some family not provided for.

Super fund members need to ensure that the nominations AND wills are compatible and that BOTH are regularly reviewed. (As often as each three years !) AND that both spouses have compatible outcomes. Now this also means that all pension terms need to be considered. eg : Is the pension reversionary ?? Who to ?

And then the tax problems need to be understood. Leaving super to your adult kids may end up resulting in them paying tax even if it goes to the estate.
 
Terry - A good post to provoke some discussion. Some replies indicate concerns. More worrying is that many of these post are confidently unaware of the problems.
Thanks Paul. I thought putting a poll in there would make it sink in more.

In Summary
  • Super is outside your will and your will cannot deal with it.
  • An exception is if it is left to your legal personal representative

  • A SMSF trustee is the one who decides where your super goes
  • An exception is if you force the trustee to pay it to a specific beneficiary via a BDBN
  • A BDBN can be invalid if not done correctly
 
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