The language around superannuation is super confusing. Nominations can be binding, non binding, lapsing and non lapsing.
Superannuation benefits are also not something dealt with automatically by your Will. Completing a valid nomination means your superannuation benefit should be distributed quickly, with certainty in the way you choose, on your death.
Who can you nominate?
Under superannuation law, you can nominate the following:
- Your spouse or de-facto spouse, including same sex partners.
- Children including step and adopted children, children of your spouse and other children within the meaning of the Family Law Act 1975.
- Individuals who are financially dependent on you at the time of your death.
- Your legal personal representative (either the executor under your will or a person(s) granted letters of administration for your estate if you die without having left a valid will).
- Someone in an interdependent relationship to you. This is a close personal relationship between two people who live together, where one or both of them provide for the financial and domestic support and personal care of the other.
This type of relationship may still exist if there is a close personal relationship but the other requirements are not satisfied because of some physical, intellectual or psychiatric disability.
Why can’t you nominate other family or friends?
The law only allows you to nominate individuals who are financially dependent on you or have an interdependent relationship with you at the time of your death. However, you can choose to have your superannuation benefit paid to your estate where you can nominate your friends and/or other family members in your will to receive these funds.
Types of nominations
Non-lapsing binding
A non-lapsing nomination which is binding on the Trustee. This ensures that your superannuation benefits are paid as you have directed as long as the nomination is and remains valid.
Non-binding
A nomination subject to Trustee discretion. The Trustee will decide who receives your superannuation benefit and will consider your preferred beneficiaries.
No nomination
The Trustee will decide who receives your superannuation benefit. This means that your superannuation benefit could be paid to people other than those who you wish to receive that benefit. Please note that contrary Court orders may override your nomination.
Where can you check your beneficiary nomination?
Your beneficiary nomination details typically will be confirmed each year in your Annual Statement and you may also be able to view your statement on your superannuation plan’s website.
What do you need to do?
If you’d like to make a nomination, please read your superannuation plan’s nomination of beneficiary form carefully then complete the form and send it back to your superannuation fund. Before you do, please ensure that you and the witnesses initial and date any mistakes otherwise the form will be invalid.
Nomination of beneficiary forms can typically be downloaded from your superannuation fund’s website or you may have received a copy in your superannuation fund’s welcome pack. You should regularly review your nomination to make sure it reflects your wishes and personal circumstances.
Taxation
The taxation rules relating to death benefits are complex and different taxation treatments may apply depending on who receives your superannuation benefit. Please seek advice from your tax adviser.