Understanding Superannuation when it comes to Estate Planning
Superannuation is one of the matters that you have to take into account when doing your estate planning.
For most people superannuation is an investment option that comes into maturity when you retire. However, what happens when that doesn’t happen? In the event that something unfortunate happens to them, most people assume that their superannuation will be dealt with by their Will. This is untrue.
The payment of a person’s superannuation entitlements upon their death is known as their superannuation death benefit. In addition to being partly determined by legislation, most superannuation funds have their own policy in regards to these matters and it is best to make enquiries with them if you are unsure.
In most cases, the trustee of the superannuation fund determines the recipient of the superannuation death benefit. The death benefit can go to the estate, or it can directly go to a beneficiary. If a beneficiary is unhappy with the decision of the trustee, they can challenge that decision in the Superannuation Complaints Tribunal. Be wary though that making in a complaint in this manner will inevitably delay payment of the benefit.
Some funds allow their members to give them directions as to the distribution of their superannuation entitlements upon their death. This is called a Binding Death Benefit Nomination, and it is a legally enforceable direction. A Binding Death Benefit is valid for 3 years and should be renewed every 3 years or so.
As part of the estate planning process, you should consider how your superannuation would affect or interact with your Will.