trustees must act responsibly, reasonably and in good faith

As discussed before the payment of death benefits from a superannuation fund are made in accordance with the rules of the fund and not as set out in the deceased’s will.

The trustees of the fund must apply the rules of the fund in good faith, responsibly and reasonably.

Death benefits from a superannuation fund are paid at the discretion of the trustee of the fund. In most circumstances death benefits may only be paid to a member’s executor or one or more of the member’s dependants.

Nomination and the Ex-spouse 

For example you make a valid binding death benefit nomination according to the governing rules of the fund requiring the  trustee to pay the death benefit to your spouse. The funds rules stipulate this nomination remains valid for five years from the date received by the trustee.

If you were to divorce and remarry within 5 years without revoking or amending the nomination the super fund trustee is not required to follow the death benefit nomination.

Even though the death benefit nomination was made in accordance with the funds rules your ex spouse is no longer your dependant for the purposes of the Superannuation laws. The death benefit will be directed at the discretion of the super fund trustee in favour of either the executor of your deceased estate or any of your dependants.

Nomination and the non dependant relative

A further example of how this applies is if you provided the trustee with a written death benefit nomination made according to the fund rules directing the trustee to pay your death benefits to your niece.

You die survived by your spouse. At the time of your death your niece is financially independent and therefore not considered a dependant under superannuation law. In this case the nomination is not valid and is not binding on the trustee who must act in accordance with the governing rules of the fund and the requirements of superannuation law.

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