What happens to my super when I die?
Did you know that your super isn’t automatically included in your will if you’ve failed to properly plan for what happens? It’s generally the responsibility of the super fund’s trustee to make choices about who gets your super when you die based on the fund’s rules. But you don’t have to leave it up to the trustee. You can nominate your own beneficiary or beneficiaries – the person or people who will get your super when you die.
When it comes to dealing with superannuation death benefits, the law governing tax and superannuation is complex. And getting it wrong could result in potential beneficiaries missing out on their inheritance.
A superannuation fund is required by law to pay a death benefit to the deceased member’s dependants. This may include a spouse, children (including adult children), or a person with whom the deceased had an “interdependency relationship”. Alternatively, a superannuation fund trustee can pay a member’s death benefit to the deceased’s “legal personal representative”, in which case it does pass to their estate.
Superannuation laws do not generally allow for a superannuation fund to pay a benefit directly to friends, parents, brother and sisters, or other relatives of an individual, unless that person was financially dependent on the deceased.
In the absence of the fund member having nominated the person they would like their superannuation to be paid to, the trustees of the superannuation fund will pay the benefit in accordance with the governing rules of their fund. This may include allowing the trustees to exercise their discretion to decide who the death benefit will be paid to, or the fund’s governing rules might require a death benefit to be paid in a particular manner, such as to the member’s estate.
How can some certainty be given to the distribution of my superannuation benefits on death?
Most superannuation funds will allow their members to nominate who they would like their superannuation to pass to in the event of their death. There are a variety of different forms of nomination including a non-binding, binding, and non-lapsing death benefit nominations.
Generally, the only people that can be nominated under a death benefit nomination include a spouse, children of the deceased, those within the deceased had an interdependency relationship. The legal personal representative can also be nominated under a death benefit nomination, in which case the death benefit will form part of the estate.
In order to get one’s super in order, it is recommended that superannuation is reviewed from time to time to ensure that in the event of a person’s death, their superannuation will be paid to the right people. A financial planner is well equipped to carry out such a review, so reach out and we can put you in touch with someone who can help.