For many Australians, their most valuable asset other than their family home is their superannuation. However, superannuation is not an asset you can leave to anyone under your Will.
Your superannuation is held in trust for you in a superannuation fund, by the trustees of the fund. The rules of that fund determine what happens to your superannuation, when you die. Most funds ask you in their application form, who you want to receive your superannuation balance if you were to die. However, the final decision about who to pay that superannuation to, is usually made by the trustee of the fund. They are not bound to give your superannuation to the person you nominate in the application form. This can sometimes lead to quite unexpected results.
On your death, your superannuation may only be paid out to an immediate family member, a financial dependent or to your estate (to be dealt with under your Will). Usually (but not always) payment will be made to a surviving spouse or children. Competing claims for superannuation often arise where there has been second relationship, between the surviving spouse and their stepchildren. The trustee will pay out the superannuation according to what they think is fair and will not consider themselves bound by any direction provided by the deceased, unless a formal binding death benefit nomination has been provided.
Superannuation legislation allows a binding death benefit nomination to be made that requires the trustee of the superannuation fund to payout a member’s superannuation to particular nominated people. However, not all superannuation funds have rules that allow for making binding death benefit nominations.
These complexities can become a problem where you specifically want to leave somebody out of your Will. The person you have left out of your Will, may even end up receiving more of your superannuation, because you have left them out of your Will. Major problems also often arise, where someone dies after recently separating from a partner. Unless estate planning is tidied up and superannuation specifically dealt with in the process, the former partner could end up receiving all the superannuation even if you have changed your Will.
Where there is a self-managed superannuation fund involved, simple mistakes can lead to very severe consequences.
As a result of these complexities, superannuation disputes are one of the fastest growing areas of litigation. The best way to avoid such litigation, is to get right in the first place by obtaining specialist estate planning advice!
Click here for more information on the Estate Planning services offered by Conrad Law.
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