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Common mistakes with estate planning for super

We look at some of the common estate planning mistakes that could see less of your super going to the people who matter most to you.


Your super is likely to be your third biggest asset after your ability to earn an income and the family home, so it’s a no-brainer that it needs to be included in your estate plans.

The trouble is, when it comes to estate planning, super doesn’t always work in the same way as other assets. It’s easy to make mistakes, and these oversights can have a significant impact on who inherits your super – and how much they’ll receive.

Here are four common mistakes to avoid.

1. You don’t have a binding death nomination

If you pass away, the trustee of your super fund has the discretion to distribute your super in the way they see fit. And their decision may not reflect your wishes.

The only way around this is to complete a ‘binding death benefit nomination'. This binds the trustee to pay your super to the beneficiaries listed by you.

2. You don’t keep your binding death nomination up to date

Binding death nominations are not a set-and-forget document. They typically need to be renewed every three years – and that’s not a bad thing. You may change your mind about who inherits your super, and major changes in your personal situation such as divorce or getting married are another trigger to review your binding death nomination.

The bottom line is, you need to update your binding death nomination every three years. If your nomination lapses, the fund trustee could once again be left to decide who inherits your super.

3. You don’t consider the impact of tax

The issue of who you leave your super to is complex. That’s because some beneficiaries can be heavily taxed on a super payout – especially if they are independent adults, which could be the case if you leave your super to an adult son or daughter.  This can create the unfair situation where one of your children receives the full value of an inheritance, while another walks away with considerably less because of the impact of tax.

This highlights the need for professional advice about who you nominate to receive your super in a binding nomination. 

4. You’re unsure exactly what will be bequeathed

The total amount of money that will be passed on as a “death benefit” from your super to your beneficiaries is normally the balance of your super plus any life insurance payout (defined benefit funds have slightly different rules).

This can create challenges when it comes to bequeathing your super. Unlike, say, a house, the value of your super is relatively fluid, continually changing no matter whether you are in the workforce and still growing your fund, or you’re retired and drawing on your super savings.

The solution: Talk to us

The upshot is that when it comes to super there could be weak spots in your estate plans. Talk to your local Mortgage Choice financial adviser today to be sure your super will go to exactly the people you choose so that your loved ones are not left vulnerable or out of pocket.

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