One of the important things about super to understand is that, as you don’t own your super and the trustee owns your super, under certain circumstances the trustee can give your super away to a person of their choosing. If you haven’t told the super fund where your super should go when you die, the trustee has full discretion to whom to give your super. In most cases that will be your estate but sometimes it is somebody who claims to be your relative and the trustee pays that person.

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You can stop this by signing a binding death benefit nomination. If the trustee has such a nomination and it is valid, then the trustee is forced to pay whom you have nominated so long as you have nominated a valid person or entity.

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What is a valid person or entity? You can always nominate your estate or legal personal representative which is the executor of your estate. You can also nominate what is called a ‘superannuation dependant’, which is any child, a spouse or a person with whom you have an interdependency relationship (usually somebody with whom you live and with whom you share some or more income and expenses). You cannot name anyone else, not your siblings, parents, the local cat home, your favourite charity or anybody else. If you want these to get your super you need to nominate your estate as the beneficiary and give them the money via your Will.

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Click here for our Fact Sheet on Super Death Benefit Nominations

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The big benefit of nominating a person as your super beneficiary is that they get the money quickly and they can in some cases, if they so choose, keep the money inside the low-tax super environment. The trouble is if the beneficiary dies with or before you, it is back to trustee discretion where the money goes.

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The disadvantage of going via your estate is that it can take 6 months or more until probate is granted, i.e. until the estate can safely be distributed.

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Superannuation law is full of pitfalls and opportunities and good advice can make a big difference. This includes the opportunity to have life, income protection and disability insurance inside super and paid by super. There are also opportunities to choose your investments, which can be very handy as the trustees may not choose the optimal investments for you.

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Please feel free to contact Christoph and the Team at any time with any questions about super, insurance, investment or any other financial or business matters

With love from the Team at In Your Interest Financial Planning
Christoph, Nicola, Marian, Deryk, Ann-Marie, Jessica, Alvin, Jade and Lin 

Dr Christoph Schnelle
Financial Adviser and Life Insurance Specialist

In Your Interest Financial Planning
t:    1800 332 225
w:   www.inyourinterest.com.au
e:   service@inyourinterest.com.au