Many people don’t realise that superannuation benefits are not an estate asset and do not automatically flow to the estate of the deceased. Despite a Will being legally binding and providing what a person may receive from an estate, superannuation benefits do not apply. A Binding Death Benefit Nomination is a written direction to the Trustee of your superannuation fund which ultimately states beneficiaries who you want to receive your superannuation benefit in the event of your death.
How to make the Binding Death Benefit Nomination valid
- The nomination must be made to the trustee in writing and clearly set out the proportions of the benefits to each person nominated and may also include the type of benefit payment (lump sum and/or income stream).
- It must be signed by the member in presence of two witnesses over 18 years old and who are NOT nominated as beneficiaries.
- It must contain a signed witness declaration
- It must be sent to the trustee (it is not valid until it is received by the trustee).
Why get a Binding Death Benefit Nomination?
It provides greater certainty on who will be receiving your superannuation benefit and ensuring it is given to the people of your choosing in the proportions you have decided. It also provides ease and speed to a death benefit being paid. If your beneficiary needs quick access to your benefit, the nomination may allow a timely distribution of assets as the beneficiary wouldn’t have to wait for the trustee or deceased’s estate to determine the distribution.
Who can you nominate as a beneficiary?
A nomination will only be binding if it is ‘valid’. One of the requirements of validity is that only dependants can be nominated, and you can choose one or more dependants. Under superannuation law, a dependant includes a spouse, children, any person financially dependent on the member, any person in an interdependency relationship with the member and a legal personal representative. The most appropriate beneficiaries to nominate is dependent on personal circumstances.
Can it be amended or revoked?
Once nomination is made, it is valid for 3 years from date it was signed or non-lapsing, depending on the superannuation trust deed options.
You can amend or revoke your Binding Death Benefit Nomination at any time. Amendments require you to complete a new nomination form and provide it to the Trustee. If you wish to revoke your nomination, you must provide written notice to the Trustee. If you wish to continue the nomination then you must also advise the Trustee prior to the date of expiration.
It is essential and recommended that you seek professional advice before making a nomination as taxation implications may arise. If you require any assistance or have estate and succession planning enquiries, feel free to get in contact with one of our experienced estate planning lawyers at Frank Law on (02) 9688 6023.
This is not legal advice.