Estate Planning and Superannuation – 10 things you may not know!

This area of the law is often full of contradictions and uncertainty.

Here are 10 things you may not have known about superannuation in an estate planning context:

1. Even though you have a current Will which is completely valid, it will not determine who receives your superannuation.
2. Superannuation may form part of your estate and be dealt with in accordance with the terms of your Will, but in most cases superannuation will be paid directly to a beneficiary without any reference to the terms of your Will.
3. Whilst you can provide in your Will that your estate be given to whoever you would like there is only a small eligible group of beneficiaries who can directly receive superannuation benefits on your death.
4. Some, but not all, superannuation funds allow you to nominate where you would like the proceeds of your superannuation paid on death. The effect of such a nomination depends on whether the nomination is binding or non-binding.
5. If it is a “non-binding death benefit nomination” then it may have no effect at all and despite the nomination, the trustee of the fund may make its own decision as to where the benefits are paid.
6. If it is a valid “binding death benefit nomination” or “non-lapsing death benefit nomination” then the nomination will bind the trustee of the fund to pay benefits to your chosen beneficiary, even if that decision is contrary to what you had directed in your Will.
7. It is important to note that a binding death benefit nomination may lapse after 3 years.
8. Your decision as to who you would like to receive your superannuation death benefits can have significant taxation consequences. Some beneficiaries will always receive superannuation benefits tax free whereas in other cases the payment of superannuation proceeds may trigger a liability for tax. Making decisions about who your superannuation is to be paid is an essential element of any estate planning.
9. Decisions about who receives superannuation may be subject to review by the Superannuation Complaints Tribunal and in NSW if a will is challenged by a person who comes within a small defined group of eligible applicants, that challenge may extend to the superannuation of the deceased.
10. Even though you have a current Will which is completely valid, it will not determine who receives your superannuation. (Point number 10 is of course a repeat of Number 1. Why? Because it is so important. Also it gets my list up to 10 points!!)

At Tetlow Legal, you will receive comprehensive, expert estate planning advice so you can rest assured knowing that your superannuation will go to your chosen beneficiaries when you die.

If you would like to discuss the interaction between your superannuation and your estate plans, please contact Tetlow Legal on 02 6140 3263 or [email protected].