In general, any death benefits paid out by your superannuation is not dealt with by your Will, and in those circumstances the Trustees of your superannuation fund have the discretion to determine who your death benefits are paid out to.
The superannuation law allows for you to direct the Trustees of your superannuation fund to distribute your death benefits to particular individuals after you pass away. This nomination is known as a Binding Death Benefit Nomination and binds the Trustees to your decision.
You can nominate any of your dependants, including any person who was financially dependant on you at the time of your death. You can even nominate that the death benefit is paid into your Estate, which then allows for your Will to deal with your superannuation.
As previously discussed, in the absence of a Binding Death Benefit Nomination your Trustees will make a determination as to who the death benefits should be paid
to. It is not unusual for the Trustees to make a ‘lazy’ determination and nominate that the whole amount is paid to your spouse or your next of kin. This may not be in accordance with your wishes.
A Binding Death Benefit Nomination is valid for three years, at which time it should be renewed. You can change your nomination or revoke your nomination at any time by advising and sending the necessary notices in writing to your superannuation fund.
If you have a self-managed superannuation fund you should check the trust deed that establishes the self-managed superannuation fund in relation to who or how your death benefits are paid when you pass away. If this is not an area which is covered by your SMSF’s trust deed, you should consider amendment of the trust deed.
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