Your Super is Not Covered By Your Will - What You Need To Do

When it comes to your superannuation, many people assume that their Will automatically decides who receives these funds when they die. 

This is not the case however, as super is not automatically covered by your Will.  Without proper planning, your super may not end up with the people that you intend it to.

To ensure that your balance goes to the people that you choose, there are two types of nominations that you could make regarding your member balance on your death:

1.      A Non-Binding Death Benefit Nomination

2.      A Binding Death Benefit Nomination (BDBN)

It’s important to understand the difference:

• Non-Binding Death Benefit Nomination – Lets the trustee of your super fund know your preferred beneficiaries, however the trustee is not legally required to follow your wishes.

• Binding Death Benefit Nomination – This legally requires your super fund to pay your benefit to the people you have nominated, provided the nomination is valid and up to date.

For peace of mind, many people choose a Binding Death Benefit Nomination to ensure their super goes exactly where they want it to.

Binding Death Benefit Nominations in SMSFs and Trust Deeds

If you have a self-managed super fund (SMSF) and you would like to put in place a Binding Death Benefit Nomination, it’s important to check that the trust deed allows for a BDBN.

Some older trust deeds may not, and may need to be updated before a valid nomination can be made.

Expiry Rules for Binding Death Benefit Nominations

For non-SMSFs, a BDBN typically only lasts for three years. After that, it expires unless it is renewed.  If this is your sort of super fund, it’s important to diarise the renewal date and make sure your nomination remains current.

For SMSFs, depending on the Trust Deed, generally BDBNs do not have an expiry period and are valid indefinitely until you update the BDBN.

Keep Your Nominations Current

Life changes such as marriage, divorce, children or the passing of a beneficiary may affect your wishes.  If you already have a BDBN, it’s important to review it regularly to make sure it still reflects your intentions.

If you don’t have a SMSF, you should review your nominations regularly, you can usually find this information listed on your annual member statement.

Wills and Insurances

A BDBN is just one part of your overall estate plan. We recommend you also review:

• Your Will – Ensure it is current and aligns with your super and estate plans.

• Life & TPD insurance – Check that your cover is still suitable as this becomes more costly as you age.

By keeping your super, Will, and insurance aligned, you can have confidence that your wishes will be carried out and your loved ones looked after.

If you’d like to discuss putting a BDBN in place for your SMSF or reviewing your existing super fund beneficiary nominations, or would like a referral to discuss your Will or insurances, please contact your client manager.