Having a valid Will in place ensures that in the event of your death your assets and interests go to the right person(s). Your superannuation however, does not automatically form part of your estate assets and therefore is not subject to the terms of your Will. Superannuation law and self-managed super fund (SMSF) governing rules determine distribution of super death benefits.

It is helpful to think of your superannuation fund as a trust fund and any distributions of death benefit can only be made at the discretion of the fund’s trustee in accordance with the Superannuation Industry Act 1993 and the fund’s trust deed. As such, death benefits can only be paid to the member’s dependants (spouse or de facto partner, children, or other legal dependants). If you wish your super to go to someone else, you must nominate a “legal personal representative”, typically the executor of your estate, and deal with it in your Will.

Superannuation death benefits are tax-free when distributed to dependants, but there are tax consequences if funds are distributed to individuals considered non-dependants by taxation laws.

Superannuation death benefits must be paid as a lump sum and/or income stream, with several options as to how it is distributed. These include a lapsing or non-lapsing binding death benefit nomination (BDBN), a non-binding nomination, a reversionary nomination for an income stream, or in the case of SMSFs, incorporate your wishes into the fund’s trust deed.

It is important that your BDBN is valid and up-to-date (generally nominations expire after three years), so that it reflects your current circumstances, otherwise it may lead to unintended consequences.

A Scammell & Co. Wills and Estate Planning lawyer will ensure your assets, including super, are dealt with according to your wishes.

Click here for further information on how Scammell & Co can help you with your estate planning requirements.


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