Most people assume that a will takes care of everything when they die. But it may come as a surprise to learn that your superannuation, often one of your largest assets, is not controlled by your will at all.
Your superannuation money isn’t owned by you directly. Your money is held in a trust that is managed by your superannuation fund’s trustee. When you die, it is the trustee who decides where or to whom your super balance and any life insurance policies is paid to. This means that if you haven’t given your superannuation fund a legally binding direction, the trustee has full discretion to decide how to distribute your super money which may not reflect your wishes.
To give your super fund a legally binding direction, you need to make a valid Binding Death Nomination.
Binding Death Nomination
A Binding Death Nomination is a legally binding instruction to your superannuation fund telling them who should receive your super balance and any life insurance when you die. If validly made, it removes the trustee’s discretion, and they will be required to follow your wishes.
You can generally find a Binding Death Nomination form on your super fund’s website. Before submitting one, here are three things you need to get right:
- Make sure it is non-lapsing – Many Binding Death Nominations expire every three years, meaning that if you don’t renew them, your nomination becomes void. It is important to check that the nomination is non-lapsing so that it doesn’t expire unless you specifically cancel or change it. In some cases, your fund will not allow you to make a non-lapsing nomination so you must set a reminder for every three years to make that update.
- Make sure it is binding – Some super funds offer a “non-binding” nomination which essentially means that the trustee is not required to follow it. Always choose a binding nomination. That will usually require you to have your nomination witnessed by two adults who are not named beneficiaries.
- Make sure it is valid – An incorrectly completed Binding Death Nomination will be void. Check that:
- the form is filled out completely and signed correctly;
- all required witnesses have signed; and
- you’ve nominated eligible beneficiaries. Under superannuation law, you can only nominate people who were financially dependent on you (such as your spouse or children) or direct your super to your estate. Many people think that they can nominate their siblings and in most cases, those nominations will be invalid on death.
Review your Estate Planning Documents
A Binding Death Nomination works best as part of your complete estate plan. Your will, enduring power of attorney, appointment of enduring guardian and Death Nomination form a holistic and thorough suite of estate planning documents which ensures that your assets, healthcare decisions and family’s wellbeing are protected.
If you’re not sure whether your estate planning documents are current or valid or if you don’t have any at all, the team at Cheney Suthers Lawyers can help your get everything in order. Get in touch with us to have a conversation about how we can assist you with your estate planning needs.