November 03, 2014
Taking a few simple steps can provide peace of mind about who inherits your super.
No one really likes to talk about what will happen after they die, but it’s an important issue when it comes to your super.
Unlike your home or other assets, super can’t be passed on through your Will. It can come as a surprise to learn that it may be left to the trustee of your super fund to decide who receives your super nest egg when you’re gone, and the trustee’s decision may not reflect your preferences.
The solution is to complete a ‘binding death nomination’. This simply means putting in writing who you would like to receive your super payout - and in what proportions, if you die.
Having a binding nomination in place offers other advantages too. It means creditors (people you owe money to) cannot make a claim on your super savings because the money doesn’t form part of your estate. It also helps to minimise processing delays in the payment of your super benefits to your preferred beneficiaries.
Simply complete the paperwork
For members of professionally managed super funds, completing a binding nomination is as easy as filling out a form provided by your fund. If you run a self-managed super fund (SMSF) check that the trust deed permits members to use a binding nomination. I can help you draft a binding nomination for SMSF members.
Who can inherit my super?
It’s worth noting that a binding nomination lets you pass your super benefits on to your dependents – typically your spouse or partner, children or an aged parent living with you. You can also nominate your legal representative, usually the executor of your estate.
However selecting who would you like to receive your super savings is an area where it is worth seeking professional advice. The purpose of superannuation is to provide for you and your dependents, either when you retire or if you pass away. Reflecting this, there can be tax implications associated with a super payout to non-dependents. Quality advice can be particularly important if you have children aged over 18, who would not normally be classified as financially dependent (even though you might be forgiven for thinking otherwise!).
Keep it fresh
If you are a member of a professionally managed fund, your binding nomination must be updated every three years to remain legally binding. This isn’t a legal requirement for SMSF members but it makes good sense to review your binding nomination regularly so that it continues to reflect your preferences.
For support drafting your binding nomination – or for further information, please don’t hesitate to contact me today.
Jason Sibio - BBus ADFP - Financial Adviser
Mortgage Choice Fianancial Planning
Authorised Rep No 449850