Superannuation and your Will – does everything add up?Fri, 21st Sep 2018
There are many aspects of an estate to consider when creating or updating a Will. One aspect that we often encounter confusion from our clients about is the relationship between their Will and their superannuation.
Many people are unaware that superannuation does not form part of your estate and that your superannuation trustee is not bound by your Will.
Your superannuation fund is legally responsible for deciding who to make payments to after you pass. You can tell your fund who you would prefer to receive your superannuation when you pass. However there are very strict laws that a superannuation fund has to follow when paying out a super account. It may be that your fund is legally required to pay someone other than your nominated beneficiary.
To ensure your superannuation is paid in accordance with your wishes, you can execute a Binding Death Benefit Nomination (BDBN). As long as it’s valid, your nomination is legally binding and your superannuation fund must follow it.
A case in Western Australia highlights the problems that can arise where there are inconsistencies between a Will and superannuation arrangements.
Following the death of his wife, a husband who was the co-trustee and the other member of a SMSF holding significant assets resolved to pay the entire benefit to himself. Because there was not a BDBN directing that the superannuation benefits be dealt with according to the Will, the fund’s trustee (the husband) was able to pay the superannuation to the estate and receive the benefits himself.
This was contrary to his wife’s wishes expressed in her Will that directed her superannuation be paid to her children, with none to go to her husband. The children challenged this decision with the court holding that the trustee of the self-managed superannuation fund could pay the death benefit to the husband (himself), and the children failed in their application.
We can assist you with preparing a binding death benefit nomination, whether it is in respect to a SMSF or an industry fund.
Does your Will truly support your wishes? Call us now on (03) 5975 7588 for a non-obligation free chat about estate planning and your Will.
Level 1, 176 Main St, Mornington 3931
PO Box 628, Mornington 3931
Phone: (03) 5975 7588
Mon - Fri: 9:00am - 5pm