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Superannuation is one of the matters that you have to take into account when doing your estate planning. For most people superannuation is an investment option that comes into maturity when you retire. However, what happens when that doesn’t happen? In the event that something unfortunate happens to them, most people assume that their superannuation will be dealt with by their Will. This is untrue.

Superannuation Death Benefit
The payment of a person’s superannuation entitlements upon their death is known as their superannuation death benefit. In addition to being partly determined by legislation, most superannuation funds have their own policy in regards to these matters and it is best to make enquiries with them if you are unsure.

In most cases, the trustee of the superannuation fund determines the recipient of the superannuation death benefit. The death benefit can go to the estate, or it can directly go to a beneficiary. Take note that the trustee is supposed to act in the best interests of the deceased – what this means is anyone’s guess!

If a beneficiary is unhappy with the decision of the trustee, they can challenge that decision in the Superannuation Complaints Tribunal. Be wary though that making in a complaint in this manner will inevitably delay payment of the benefit.

Binding Death Benefit Nomination
Some funds allow their members to give them directions as to the distribution of their superannuation entitlements upon their death. This is called a Binding Death Benefit Nomination, and it is a legally enforceable direction.

Other matters to take into consideration
Tax – Be aware that under certain conditions, tax is payable on the superannuation death benefit.

Insurance – Superannuation funds are increasingly becoming more sophisticated. Many funds provide their members with life insurance coverage, which becomes part of the death benefit that is payable.

Interaction with Will – As superannuation is not dealt with by Wills, some consideration must be put into the manner in which it is distributed and if it is an equitable distribution. The alternative is to provide a direction to the superannuation fund where any benefits payable are paid into the estate. However, not every superannuation fund will allow you to do this.

For more on Estate Planning, please see the below articles:
Estate Planning – a new year’s resolution
Challenging a Will – Family Provision Orders
Wills for Business
Power of Attorney – Information

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