SuperAnnuation & Death Benefits
I didn’t know I had that
For many people, superannuation and the associated death benefit will be the most significant financial resource that they have.
A public fund is usually administered by a large national financial/trustee institution. Alternatively, superannuation interests may be held through a self managed superannuation fund (“SMSF”). These funds are growing more and more popular, particularly with small to medium business proprietors.
This is a guideline only for the trustee in terms of who to pay a death benefit to.
The trustee isn’t obligated to follow your instruction. This may allow some flexibility however unintended distributions may occur.
One advantage is that it provides the trustee with guidelines as to how you wanted the benefit paid and to whom. They may still consider other circumstances and factors.
The trustee could use this discretion inappropriately.
Unintended distributions that are not wanted by the deceased member may occur.
Where valid, this results in the trustee being obligated to follow the instructions in the nomination.
It states who benefits are to be paid to and in what proportion. They provide certainty and peace of mind that your benefits will be paid as you intend.
A valid nomination to direct payment to your estate may then enable your superannuation death benefit to be dealt with pursuant to your Will which can allow for non dependants to benefit if you wish.
May be useful for dealing with blended families.
There are restrictions however, all the beneficiaries nominated must be dependants of you just before your death. You may nominate your legal personal representative (executor of your Will).
These nominations can be used to defeat family inheritance claims by ensuring the death benefit bypasses your estate.
Pension payments continue to your dependent beneficiaries.
The only people who can become a reversionary beneficiary are a spouse or former spouse, a child aged less than 18 years or any person where an interdependency relationship (defined by law) existed just prior to death.
By putting this in place, upon death the income payments will continue to be made to your beneficiary.
A member can establish a reversionary beneficiary when they commence an income stream from the fund, by putting this in place it means that upon their death the income payments will continue to be made to the specified beneficiary (provided they are able to be a reversionary beneficiary under the relevant superannuation and tax laws).
The SCT is an independent tribunal set up to deal with complaints regarding superannuation funds.
If a beneficiary feels that they have not been adequately provided for or missed out on a superannuation death benefit, they may apply to the SCT for them to review the trustee’s decision.
This would not be available if a binding death benefit nomination was in place.
After review, the SCT has the power to either overturn or confirm the trustee’s decision with respect to that benefit.
An application to the SCT for the review of a trustee decision must be lodged within 28 days of the trustee’s decision being made.
The SCT does not have jurisdiction over Self Managed Super Funds.