Superannuation Death Benefits
It is not commonly known that a person’s superannuation fund is not regarded as part of a person’s estate once they pass away. So, what happens to the super fund upon the death of the member? Once that member dies a death benefit is paid by the super fund to either a dependent beneficiary or the member’s estate. A death benefit dependant can be either:
* the deceased’s spouse or de facto spouse;
* a child of the deceased (any age); or
* the deceased’s spouse or de facto spouse;
* a child of the deceased (any age); or
* a person in an interdependency relationship with the deceased i.e. a close personal relationship between two people who live together, where one or both provides for the financial, domestic and personal support of the other.
How is it decided whether the death benefit is paid to a dependant or the estate? This is done by a binding death benefit nomination which allows the member to choose whether to leave the death benefit to a nominated beneficiary or his estate. The member can also choose to have the nomination expire every three years (lapsing) or not to expire (non-lapsing). If no nomination is made at all then the trustee of the fund has to decide who gets the death benefit.
Most clients I talk to who have super have no idea whether they have made a nomination for their death benefit or what kind of nomination it is. It certainly makes sense to check this out sooner rather than later!
July 2019