Estate planning is such an important thing to have in order but it is far too often left undone. This makes what is already a tough time for your family even tougher. Having the right documentation in place reduces the stress for your loved ones and removes any uncertainties. One such document is known as a death benefit nomination which directs your superannuation benefit to your desired beneficiary. It can come in many formats so make sure you know which best suits your needs.
What types are there?
Death benefit nominations can be lapsing or non-lapsing and binding or non-binding. A lapsing nomination will need to be updated every three years. This does not need to be done in the case of a non-lapsing nomination (but they can be amended or revoked). Although you may think the non-lapsing format sounds the most suitable it is important to note that your circumstances do change and a previous nomination may no longer be relevant. It is critical that you still review your nomination if you choose to make it non-lapsing.
A binding nomination will mean the trustee of your super fund must adhere to the instructions set out in the form. A non-binding nomination means the trustee can simply use it as a directive. They may choose an alternative payment option.
Where can you direct your benefit?
Your benefit can only go to a dependent beneficiary or your estate. A dependent beneficiary is your spouse, your children if under 25 and still studying, a financial dependent or an interdependent. You can also direct your benefit to your legal personal representative. This will mean it will be paid to your estate and distributed as per the instructions in your Will.
How do they work in the event I also have a reversionary pension?
A reversionary pension automatically reverts the pension to your spouse. In the event that your nominated reversionary pensioner is no longer eligible to receive the pension or has pre-deceased you, your death benefit nomination will come into play.
Check to see if you have one in place and read our blogs to learn more
What are the key steps I should take to get my estate plans in order?
- Prepare a Will
- Check to see if you have a reversionary pension in place and ask your advisor if this is suitable for you
- Check to see if you have death benefit nominations in place and be sure to review them at least every three years (even if they are non-lapsing) and confirm they are valid
- Contact your advisor, lawyer or financial planner regularly to review your estate planning documentation
Remember – your circumstances often change. Don’t be complacent. To discuss the death benefit nomination contact Your Super Specialist here.
This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.