Binding nominations - making sure it counts!

Snippets

Our office has recently noticed a number of issues relating to death benefit nominations for superannuation.

It is important to know that a superannuation member is unable to include directions in their Will in relation to the distribution of superannuation benefits and may only nominate a beneficiary or legal   personal representative (LPR) to receive their superannuation benefits in the event of their death. In any fund, in order for a nomination to be valid the member must nominate either a beneficiary who meets the definition of a dependent under SIS regulation or to their LPR (generally the executor of their Will), who may distribute the proceeds in accordance with the Will. 

Superannuation death benefits can only be paid to ‘dependants’ as defined in sub-section 10(1) of the SIS Act.

This includes:

· Spouse (including de facto and same sex partners).

· Children (any age).

· Financial dependants.

· People in an interdependency relationship with the   deceased.

· The deceased LPR.

If a nomination is not a dependent of the deceased the nomination is invalid and generally ignored by the trustee of the fund. If you do not have a nomination that is a dependent then nominating the LPR is generally the next best choice. With binding nominations it is worth noting that it requires two witnesses over age 18 and they cannot be any of the  nominated beneficiaries.

There can be tax consequences of your choices so we recommend that you consult your financial adviser before  completing or changing your death benefit nomination.

  

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