Superannuation is a complex area of Estate Planning that a lot of people don’t really understand. It is important to think about your super when considering your Estate Planning as it can be a significant asset in your Estate.
It comes as a surprise to most that your super does not automatically form part of your Estate and is not automatically governed by your Will. This is because your superannuation is not actually held by you. It is held by your superannuation fund as trustee and is governed by the rules of the relevant Trust Deed.
Most superannuation funds will allow you to make a ‘Binding Death Benefit Nomination’ or a ‘Beneficiary Nomination’. In this way you can control the distribution of your superannuation entitlements on death.
Provided that the Nomination has been completed correctly and is valid, the Nomination binds the trustee to follow your instructions. Depending on the particular fund, the Nomination may only be valid for 3 years, so it is important to keep it updated and reflecting your current circumstances.
Non-Binding Nominations also exist which allow greater flexibility for the trustee. This allows the trustee to distribute the funds in the most tax effective way. These nominations do not expire; however, they should be reviewed frequently.
If you have further questions please contact us at frank@franklaw.com.au
This is not legal advice.