How is Superannuation dealt with in an Estate?
The answer to how Superannuation is dealt with in Estate matters varies depending on how the superannuation policy is set up and whether there is a binding death nomination in place on the policy.
What is a Binding Death Nomination?
A binding death nomination is a legally binding document that removes the discretion of a Trustee of a superannuation fund who could otherwise decide to pay superannuation benefits to one of a class of four beneficiaries, namely –
- A spouse (married, defacto or same sex);
- A child;
- A person financially dependent upon the deceased (eg a step-child under 18 years); or
- The Personal Legal Representative (ie Executor or Administrator) of a person’s Estate.
The Binding Death Benefit Nomination directs the Trustee to pay the superannuation benefits after your death to the beneficiary or beneficiaries you have nominated.
When making a Will, it is also important to put in place arrangements for your superannuation which may not necessarily form part of your estate or be dealt with by your Will.
What if the Superannuation is paid to the deceased’s Personal Legal Representative?
If this occurs, the superannuation will form part of your estate assets and will then be distributed in accordance with the Will, or if there is no Will, in accordance with the Rules of Intestacy.
The Trustee of a superannuation fund may receive numerous death benefit claims from potential dependants or beneficiaries. In superannuation law, a “dependent” includes a spouse or a child and they do not have to be financially dependent upon the deceased.
However, in the absence of a Binding Death Nomination, the Trustee may decide to either:
- Pay the benefits to the Legal Personal Representative of the estate rather than to any claimants; or
- Pay the benefits directly to one or more of the claimants.
If you are a beneficiary under a Will and there is no Binding Death Nomination, it may be important for you to make a claim for the superannuation benefits to the trustee of the superannuation fund.
What if a member of your family has lodged a claim for the deceased’s Superannuation?
In this case, you should also lodge a claim.
If you are a dependant of the deceased and another dependent makes a claim for the deceased’s superannuation, there is no guarantee that the Trustee of the superannuation fund will pay the moneys to you or to the other claimant.
The Trustee of the superannuation fund will look at the financial and non-financial dependency between the claimant and the deceased, whether there is a valid binding death nomination in place and each claimant’s individual circumstances.
The Trustee may also decide to pay the superannuation funds to the Legal Personal Representative for them to become part of the estate assets for distribution in accordance with the Will or the Rules of Intestacy.
What if I object to a Superannuation Death Benefit payment?
If you have been contacted by a Trustee of the deceased’s superannuation fund or a member of your family about a proposed payment of the superannuation death benefits, it is imperative that you read all documents very carefully.
If you sign documents agreeing to sign away the rights you have to superannuation death benefits, you may lose your entitlement to bring a claim at a later time in respect of those benefits.
If you do not agree with the proposed payment, or you feel that you were financially dependent on the deceased, you should consider objecting to the superannuation death benefit payment.
It is important to seek legal assistance in preparing an objection so that you can properly outline your claim to the superannuation benefits.
If you have questions regarding the distribution of estate proceeds or you have been unfairly treated under a Will, call Geoff Brazel, Probate & Estate Lawyer on 4324 7699 to find out where you stand.