When you die, it is not only Succession Law that governs who gets your assets. Most people in Australia have Superannuation, which is governed by superannuation laws, which give your super fund the power to decide who receives your superannuation when you die. You might believe that nominating a beneficiary through your superfund or in your Will over rides the super funds power, but this may not be the case.
The power of a Super fund to nominate who gets your superannuation has benefits including the ability to take into account changed family relationships if you haven’t updated your nomination. However if you haven’t updated your nomination the super fund may take into account a prior nomination and as a result a former beneficiary (such as an ex spouse), may receive your superannuation.
In order to better manage your estate you can make a Binding Death Benefit Nomination (Binding Nomination). A binding nomination enables you to nominate any of your dependents, which might be your current partner, any, or all of your children regardless of age, or your estate (enabling the proceeds to be distributed as part of your Will).
You can make a binding nomination at any time however if you don’t the super fund will give your superannuation to your beneficiaries in whatever way it believes is fair and reasonable. In exercising this power the super fund may look at any nomination that you have previously made to help them make this decision.
It must be remembered that binding nominations are only valid for three years, and may be revoked or changed at any time by sending the fund a new binding nomination, witnessed by two non beneficiaries. Importantly if your nomination expires, and is not renewed, your benefits are paid to your estate.
As with any decision regarding your estate it is important to take into account any tax and legal implications of the decision to make a binding nomination.
How do I make a binding nomination?
A superannuation fund is governed by rules set out in its Trust deed. In order to make a binding nomination you must contact your super fund to check that it is permitted under the Trust deed. If it is allowed the fund will provide a binding nomination form that requires your signature to be witnessed by two people who will not receive your Super in the event of your death.
What happens if my nomination is invalid?
If the binding nomination does not meet the rules of the Trust Deed or under Superannuation law (for instance it is not signed and witnessed properly), it is invalid and the Super fund can decide who gets your superannuation.