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Your Superannuation Death Benefit
You might assume that your Will controls how all your money will be divided when you die.
That is not necessarily enough to decide what happens to money in your super fund, even if you have started drawing on your super as part of your retirement (eg. through an allocated pension). In fact, special rules control how your super fund trustees are allowed to distribute the money, and how that money will be taxed. Under those rules, various people may be entitled to claim a share of your super benefits.
Tips on how to make it easier for everyone
You can take a few simple steps to make things easier for everyone if you die while you are in a super fund:
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Nominate to the fund trustee who you want to receive your death benefit. You may be allowed to make a ‘binding nomination’, which the trustee must follow, in which case you can use your Will to manage the way your benefit is distributed. Otherwise, you can at least make a ‘non-binding’ nomination, to guide the trustee.
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Keep your nomination up-to-date, especially if your wishes or personal situation change (eg. you re-marry) or for binding nominations. This can stop people from arguing that your nomination is no longer useful or relevant.
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Let your fund know if you have several dependents. You can explain your wishes for each of them, which is far more helpful than giving your fund no guidance at all.
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Explain your wishes to your dependants, to help prevent any disputes after you die.
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Talk matters over with people who may need to prove their financial dependence on you. It can help to give them relevant financial records or written agreements about the support you were giving them, in case they need to prove their claim.
The list above is not exhaustive. In some cases there can be additional complexities when dealing with nominations. Ultimately the decision as to whom can receive your death benefits will be influenced by the superannuation law, taxation law and the rules of your superannuation fund combined.
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