Super Death Benefit

Super Death Benefit

In 1991, the Federal Government introduced a guarantee that all Australians would have a fund to use for their retirement and introduced Superannuation. Since then, it is a major asset for most Australians and is often a large component of your total assets you hold when you pass away.

It is a common misconception that when you pass away, your Superannuation becomes part of your estate. In most situations, your super fund pays any super held at the time of your death to a nominated beneficiary, rather than the money being paid to your estate. This is called a “super death benefit”. Most super funds, including self-managed super funds, allow you to make a nomination to a beneficiary of your choice, by making a non-binding or binding nomination.

If you did not make a nomination, or have a non-binding nomination in place, the trustee of the fund may:

• Use their discretion to decide which dependent or dependents to pay the death benefit to; or
• To make a payment to your legal personal representative (executor of their estate) for distribution according to the instructions in your will.

A death benefit can be paid as either a lump sum or income stream. If a death benefit is paid to someone who is not a dependent, it must be paid as a lump sum.

So the question is – who is a dependent? A dependent under superannuation law is a person who at the time of death was:

• A spouse or de facto spouse;
• A child of the deceased (any age); or
• A person in an interdependency relationship. This relationship exists if you have a close personal relationship with that person, you live together, and/or you each provide the other with domestic support and personal care.

If you wish for your superannuation to go to a non-dependent, then it may be best to nominate your legal personal representative as the beneficiary of your superannuation and distribute your super through your will.

You should always read your Superfund’s distribution guidelines before making any death benefit nomination.

Bader Pendergast-Lee is Solicitor at Zande Law Solicitors, Suite 9, Norwinn Centre, 15 Discovery Drive, North Lakes, practicing in the areas of Wills and Estates. If you need legal advice in relation to distributing your superannuation through your estate, please make an enquiry with our office and our wills and estates team will assist you with your estate planning and your wishes regarding your superannuation.

The information in this article is merely a guide and is not a full explanation of the law.  This firm cannot take responsibility for any action readers take based on this information.  When making decisions that could affect your legal rights, please contact us for professional advice.