Where does my Super go when I die?

Contributed by Brett Davies Lawyers

Please contact Norbert Cornell at accountants.com.au, 61 2 99568008 or 61 0437381288

QUESTION: I recently asked my adviser what happens to my superannuation when I die.

My adviser immediately turned to my Self Managed Superannuation Trust Deed and told me that the trustee of my superannuation fund will decide who will receive my superannuation.

This didn’t sit well with me. Although I trust my trustee, I want to decide who will get my superannuation.

My adviser told me I should update my trust deed to allow for a binding nomination.

What is a binding nomination and what should I know about them?

ANSWER: A binding nomination forces the trustee of your superannuation fund to give your superannuation to the people who you want to receive it when you die.

Binding nominations have only existed for several years so don’t be surprised if your trust deed doesn’t allow for them. Even now, many new trust deeds (particularly badly drafted trust deeds) don’t allow for them. Also, you might think you have completed a binding nomination but it may be a non-binding nomination (that is, you have made a suggestion to your trustee who you would like you superannuation to go to, but your trustee is not forced to follow your wishes).

A binding nomination must be current when you die. For your binding nomination to be current, you must ensure not only that you have made a nomination but you have also renewed the nomination every 3 years. This can be difficult if you do not have a power of attorney granting your attorney to renew your binding nomination when you have lost mental capacity.

If your binding nomination has expired, (this is probably 90% of the population) your trustee will be required to hand over your superannuation to one of 2 groups:

Your estate; or
Your dependants.
Your “estate” is of course your Last Will and Testament if you have made one. Your “dependants” is a strange legal term but includes your family, some relatives and de-factos.

If you had a retail or industry super funds the trustees of those funds (mostly in Melbourne) act as god when it comes to your superannuation when you die. Although I have to tell you that the trustees generally don’t like deciding what to do with your superannuation. They would much rather someone else tell them where your superannuation should go.

As you have a self managed superannuation fund then your next of kin, or other trustee such as your 2nd wife or children from your first marriage decide who will get your superannuation if you don’t have a current binding nomination.

Of course, as have a self managed superannuation fund then you can do update your trust deed to allow for non lapsing binding nominations.