Super Death Benefits Nominations | Wilson & Assoc Chartered Accountants

Super Death Benefit Nominations

Superannuation is a significant asset, and planning for its distribution after one’s passing is crucial. A death benefit nomination serves as a vital tool in directing how superannuation death benefits should be allocated.

What is a death benefit nomination?

A death benefit nomination is a written direction from a member to their super fund, outlining how they want their superannuation death benefits distributed. Without a valid nomination, these benefits default to the member’s estate. Importantly, this nomination facilitates direct payments to specified individuals, bypassing the need for formal probate or letters of administration unless a personal legal representative is specified.

What are the types of death benefit nominations?

1. Binding Death Benefit Nomination

A directive, valid for up to three years, provides a clear outline of super contribution, and if valid at the time of the member’s death, the trustee is legally bound to follow it.

2. Reversionary Beneficiary

Automatic payments are made to a nominated beneficiary receiving income stream, ensuring a seamless transition of benefits.

3. Non-Binding Death Benefit Nomination

The members guide the super distribution, the trustee retains discretion allowing flexibility on the allocation of death benefits.

4. Non-Lapsing Binding Death Benefit Nomination

A permanent directive remains in place unless cancelled or replaced by the member. Like the binding nomination the trustee to follow it if valid the time of the member’s death.

How do you nominate beneficiaries?

•   Both binding and non-binding death benefit nominations can only be made to the deceased’s legal representative or dependant under superannuation law.

•   A reversionary beneficiary must qualify as a dependent. This is defined as the member’s spouse, child or any person who has an interdependency relationship.

•   Interdependency relationship criteria include a personal relationship, financial and domestic support and more.

How are death benefits taxed?

•   Lump sum death benefits are generally tax-free if paid to dependents for tax purposes.

•   Dependents generally pay lower rates of tax than non-dependents.

What are the benefits of having a nomination?

•   Superannuation assets are not automatically included in the estate, allowing directed benefits to preferred dependents.

•   Ensures alignment with the deceased’s will, reducing the risk estate claims by other beneficiaries.

How to submit a death benefit nomination?

When submitting a death benefit nomination, consider the following:

•   Complete the form here and send it to your fund.

•   Ensure nominated beneficiaries meet specified criteria, allocating percentages totalling 100%.

•   Multiple accounts can be included on the same form for consistent beneficiaries; otherwise separate forms are needed.

•   Changing or cancelling an existing nomination requires submitting a new form, which overrides the previous nominations upon approval.

How Wilson & Assoc can help?

Understanding and actively managing super death benefit nominations provide individuals with the control and assurance that their superannuation assets will be distributed according to their wishes. At Wilson & Assoc we can assist you in this critical aspect of comprehensive estate planning and financial management.