Does your Will work with your Superannuation? Binding Death Nomination's can be tricky seek out an Expert!

Superannuation and your will

When considering your estate planning documents often clients think about keeping their wills and power of attorney's up to date but forget about making their superannuation work with their will and thus risk their wishes not being carried out.

You must ensure that your superannuation death benefit ends up with the correct beneficiary. We often get asked by clients when discussing estate planning if your will can be a binding death benefit nomination for the purpose of your superannuation? Normally your superannuation death benefit (and any life insurance attached to it) will not form part of your estate. Normally the beneficiaries of the death benefit will be decided by the trustee of your superannuation fund. However:-

  1. If you have made a “non-binding nomination” then the trustee will consider it.
  2. If you have made a “binding nomination” then the trustee will be bound to follow that nomination unless it has lapsed; and
  3. If you have made a “non-lapsing binding nomination” only then will the trustee be bound to follow the nomination.

In a recent case before the Superannuation Complaints Tribunal a member of a superannuation fund had a clause in his will making a binding death benefit nomination. For a binding death benefit nomination to be valid the superannuation laws require that:

  • If it is a lapsing death benefit nomination it will remain in effect for 3 years from the date it is first signed, confirmed or last amended;
  • If it is a non-lapsing death benefit nomination it will not expire unless it is amended or revoked;
  • The document will not take effect until it has been received and accepted by the Trustee while the member is alive and signed by two independent witnesses.

The member’s will did have two independent witnesses however, the member died within three years of making his will. As stated above the superannuation laws require that the nomination had to be given to the Trustee while the member was alive. This did not occur. The Tribunal decided that the nomination made in the will was not binding and therefore the trustee of the superfund had discretion as to where the benefit should be paid. The trustee could therefore ignore the member’s intention!

You should check that your will and any superannuation death benefit nominations are valid and will give you your desired result, and if unsure check with your lawyer.