You’re growing your super to fund your dream retirement. But what happens to your super in the event of your death?
When sorting out estate planning, people tend to forget about making plans for their superannuation policies. It is a little known fact that superannuation does not automatically form part of your estate. You are required to make a nomination in order to ensure your loved ones are taken care of in line with your wishes.
You have the option to nominate one or more people to directly receive your superannuation in the event of your passing, or you can elect it to be paid to your Legal Personal Representative (executor of your Will). This means it gets paid to your estate and distributed as per your Will.
Who receives your super?
There are some rules about who can be nominated to receive your superannuation. To be a beneficiary of someone’s superannuation policy they must be classed as a dependent at the time of your death. This could be your spouse (including same- sex and de facto couples), your children, a financial dependent or someone that you are in an interdependent relationship with (living with someone, providing financial support or personal care).
If you don’t make a nomination at the time of your death, your superannuation provider is likely to pay it to your known dependents such as spouse or children or your legal personal representative. This may or may not be what you had in mind for your assets.
Why keep your nomination up to date?
Generally speaking, Binding Nominations expire every 3 years. However, some super funds have an option for a non-lapsing Binding Nomination, which means they don’t expire and remain in place until they are revoked.
It is important to note that if you remain legally married to someone and have separated, they are still considered a dependent under superannuation law and the superannuation fund may chose to pay a portion of your balance to a former partner (Reference). To avoid this, it is important to keep up to date with nominating a beneficiary, and if your circumstances change at any time its best practice to complete a formal review of your financial situation.