Not only is it very important to think carefully about making your Will and who you want to gift your estate assets to, it is equally important these days to think carefully about what should be done with your superannuation benefits.
Most people do not realise that superannuation does not necessarily form part of your estate when you die. That is because superannuation money is money already held in trust for you by a Superannuation Trustee who has a discretion about who the superannuation funds will be paid to upon the death of a member.
Under superannuation law, the Superannuation Trustee has a discretion to pay the money to 4 broad categories of beneficiary, namely –
- A spouse;
- A child;
- A person financially dependent upon the superannuation member (eg step-children under 18 years of age); or
- The “legal personal representative” of the deceased member – that is, their Executor, meaning if this beneficiary is chosen the money will become part of the estate assets of the deceased person to be dealt with by their Will.
The Superannuation Trustee’s discretion can be taken off them by the member lodging a01 (BDBN) form with the Trustee. This means the Trustee must pay the money to the beneficiary nominated by the superannuation member.
Some useful tips for you –
- The nominated beneficiary must be one of the above classes of beneficiary;
- If you nominate someone else, then the nomination may be invalid (eg do not nominate parents, siblings, step-children over 18 years of age, extended family members, friends or charities – because the nomination will be invalid);
- A BDBN must be renewed every 3 years (check the rules of your superannuation fund) otherwise it will lapse and become non-binding – in which cas the superannuation trustee may consider what was in the previous BDBN but will not be bound to follow it;
- Normally, the BDBN must be signed just like a Will, namely, by the superannuation member in the presence of 2 witness all present at the same time.
In one case –
- We acted for two sons, aged 19 & 21, of a deceased person who had no estate assets only debts but who had superannuation of $400,000.00.
- The deceased father had a second wife with whom he lived for only 12 months before separating from her and they had been separated for 2 years but not divorced when the father died.
- The Superannuation Trustee made a decision to pay 100% of the superannuation benefits to the estranged second wife and nothing to the sons.
- On behalf of the sons we –
- Obtained a Court injunction to restrain the Trustee from paying the money to the second wife;
- Obtained a Court Order declaring the superannuation money to be “notional property” (applicable only in NSW);
- Obtain a “family provision” Order from the Court for the two sons resulting in them receiving approximately $150,000.00 each.
- Substanial legal costs were incurred and the estranged second wife still received a small amount from the superannuation moneys.
No doubt if the deceased father had have been aware of what could happen, he would have lodged a BDBN with the Superannation Trustee before he died and avoided all of the cost and distress his sons had to go through.
If you are considering any estate planning issues then contact Geoff Brazel at Brazel Moore Lawyers on (02) 4324 7699 for more information.