Part of our “Where There’s a Will…” series: Read Part 1: Joint Tenancy and Estate Planning before continuing with Part 2.
This is the second article in our series exploring practical steps you can take to reduce, or potentially prevent, a challenge to your estate.
Why Superannuation Matters in Estate Planning
One important step in your estate plan is considering how you will deal with your superannuation.
Your superannuation does not automatically form part of your estate or pass under your Will. Therefore, you should consider how your superannuation will be distributed after your death.
You should also consider whether a Binding Nomination is appropriate for your circumstances.
The Australian Taxation Office provides information about what happens to superannuation when a person dies, including how superannuation death benefits may be paid.
Estate Assets vs Non-Estate Assets
There is an important distinction between “estate” assets and “non-estate” assets.
Most people are surprised to learn that their superannuation does not automatically fall into their estate. Instead, several factors can affect how it passes after your death.
These factors can include your fund’s rules and any valid beneficiary nomination you have made.
This distinction can become particularly important when developing an estate plan. It can also matter when considering the potential for a challenge to your estate.
The Australian Securities and Investments Commission’s Moneysmart guidance explains how superannuation can be dealt with after death, including information about beneficiaries and superannuation death benefits.
What Is a Binding Nomination?
A Binding Nomination can be a useful estate planning tool for dealing with your superannuation.
It allows you to nominate the beneficiary or beneficiaries who are to receive your superannuation death benefit. However, the nomination remains subject to the rules that apply to your superannuation fund and the type of nomination you make.
Depending on the circumstances, a valid Binding Nomination may direct your superannuation death benefit to the nominated beneficiary rather than through your estate.
By putting a valid Binding Nomination in place, you can provide clear instructions about who should receive your superannuation after your death.
This may help keep the benefit outside your estate. It may also reduce the assets available to meet an estate claim.
The ATO explains the rules that apply to superannuation death benefits and beneficiaries. However, the specific requirements for a Binding Nomination can also depend on your superannuation fund’s rules.
Strict Rules Apply to Binding Nominations
However, you must follow strict rules to ensure that a Binding Nomination is valid.
The requirements can vary depending on your superannuation fund and the type of nomination you make. If you have a self-managed superannuation fund, you should also check the terms of the fund’s trust deed and any requirements it sets for Death Benefit Nominations. Read our guide to self-managed super funds for more information.
For this reason, you should obtain legal advice before putting a Binding Nomination in place. You should also review an existing nomination regularly as part of your broader estate plan.
A nomination that does not meet the relevant requirements may not achieve your intended outcome. Professional advice can help you understand the requirements that apply to your circumstances.
Get Advice About Your Estate Plan
Properly dealing with your superannuation can form an important part of a broader estate planning strategy.
Our experienced lawyers can advise you about Binding Nominations and other strategies that may help reduce the likelihood of a challenge to your estate.
Contact us today to discuss your estate planning needs.
Read the series:
- Where There’s a Will… (Part 1): Joint Tenancy and Estate Planning
- Where There’s a Will… (Part 2): Superannuation and Binding Nominations
- Where There’s a Will… (Part 3): Asset Ownership and Estate Planning