When planning your estate, it’s common to assume that all your assets, including your superannuation, will be dealt with according to your Will. However, this is not the case. Superannuation sits outside your estate and is treated differently under Australian law. For many South Australians, this can come as a surprise, and it can have serious consequences if not properly planned for.
Superannuation: Not part of your estate
Your superannuation is held in trust by your super fund. When you pass away, the trustee of the fund decides who receives your superannuation death benefits unless you’ve made a valid Binding Death Benefit Nomination.
This means that:
- Your super does not automatically pass under your Will
- The super fund trustee has discretion to decide who gets your super (if no binding nomination is in place), and
- Your intended beneficiaries may miss out if your super is not properly dealt with
Who can receive your super?
By law, your super fund can only pay your death benefits to:
- Your dependants under superannuation law; including your spouse (de facto or married), children of any age, someone financially dependent on you, or someone in an interdependency relationship with you;
- Or, your legal personal representative (i.e. your estate), if you choose to direct it there
This means you can’t just nominate anyone and that makes proper planning even more essential.
Why a Binding Death Benefit Nomination is so important
A Binding Death Benefit Nomination (BDBN) is a legal document that tells your super fund exactly who you want to receive your superannuation when you die.
If the nomination is valid and in force, the trustee must follow your instructions, and they cannot exercise discretion or override your wishes.
Key benefits of a BDBN:
- Certainty – Your wishes are followed precisely
- Avoids disputes – Reduces the chance of family disagreements or legal challenges
- Control – Lets you direct your super to specific people, or to your estate to be distributed under your Will
Without a binding nomination, the trustee may decide to pay your super to someone you didn’t intend, even if your Will says otherwise.
What makes a nomination binding?
For a BDBN to be valid, it must:
- Be made to eligible dependants or your legal personal representative
- Be in writing and signed in the presence of two adult witnesses (not beneficiaries)
- Be provided to your super fund, and
- Be renewed every three years, unless your fund accepts non-lapsing nominations
Each super fund has its own process, so it’s important to check with your fund and get advice to ensure your nomination is valid and current.
Estate planning isn’t just about your Will
At our firm, we regularly advise clients across South Australia on comprehensive estate planning and that means looking beyond just your Will. Superannuation is often one of your largest assets and leaving it to chance can lead to costly and emotionally draining outcomes for your loved ones.
If you’re unsure whether you have a valid BDBN in place, or whether your super will be distributed as you intend, now is the time to act. Call one of Lindbloms Lawyers experienced Estate planners today on 8357 7611.