Super Anyone?

 

Most of us have by now have accumulated some amount of superannuation and most funds permit a member to nominate who receives their benefits if they die.

Despite what many people believe, a person’s Last Will and Testament does not include nor can it deal with that person’s superannuation death benefits. These benefits can only be dealt with by ensuring that you have completed a valid binding nomination as part of your superannuation fund.

But what if you fail to make that nomination or the nomination is itself not valid? Who receives your benefits?

In circumstances where there is no binding nomination at the date of the member’s death, the governing rules of the super fund provide the process for determining who will receive the death benefits of that deceased member, this usually involves the trustee of the fund deciding who will receive the benefits.

A nomination could be invalid for a number reasons, these include:

  • it may have lapsed;
  • it wasn’t received by the trustee of the fund prior to the member’s death;
  • the member may have lacked the necessary mental capacity; or
  • the person nominated is no longer considered a ‘dependant’ of the deceased member.

In determining who is a dependant, both the rules of the fund in question and the definition in the Superannuation Industry (Supervision) Act are considered. Generally speaking, a ‘dependant’ is a person (including spouse/child) that the member has an interdependent relationship.

It should be noted that many funds have their own nuances when it comes to the definition of ‘dependant’ and it is incumbent on the member to ensure that their nomination is compliant with the terms of the fund.

As to the matter of an ‘interdependent relationship’, the spouse or child of the deceased member can usually be proven quite easily by providing the appropriate documents such as a marriage or birth certificate.

What can sometimes prove more difficult, however, is a de facto relationship or where the living arrangements are not clearly defined. In such circumstances, it may be necessary to show that there was a degree of financial and domestic support that was being provided by the deceased member.

Ultimately, the trustee of the fund has the final discretion as to who to pay and how much they receive, but assuming that the member has made a valid binding nomination there is usually little reason for the trustee to diverge from that.

The Australian Financial Complaints Authority (AFCA) recommends that a person should regularly review all their superannuation, life insurance policies and binding nominations so as to ensure that the nominations are both valid and in accordance with the person’s wishes as to who shall receive those benefits on the passing of the member.

The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.