Superannuation can be a significant asset for many people and for some, it represents the larger part of their Estate. However, superannuation benefits don’t automatically flow to your Estate when you die. They are instead are distributed by the Trustee of the superannuation fund based on the rules of the fund and the relevant superannuation law.
While this is the case, you can make your wishes clear to the Trustee by making a binding death benefit nomination.
What is a binding death benefit nomination?
A binding death benefit nomination (BDBN) binds the Trustee of your super fund to pay your superannuation benefits to the beneficiaries you nominate when you die. In making a BDBN, you nominate the beneficiaries and the percentage you would like them to receive. While the rules differ from fund to fund, you can usually nominate:
- your spouse,
- children, and
- your personal legal representative (the executor of your Will or administrator of your Estate) to distribute as per your Will.
Depending on your super fund, BDBN’s can be lapsing or non-lapsing. Lapsing nominations usually expire after three years and need to be remade to be valid.
Why should you make a BDBN?
A BDBN makes your wishes clear and a payment from the superannuation fund to your beneficiaries can be expedited because of this. A BDBN can provide some peace of mind knowing your loved ones will be looked after once you are gone.
BDBN’s are also particularly useful in modern family dynamics where there may be multiple parties who can make a claim on your Estate or where there has been family conflict.
When should you make a BDBN?
You should review your BDBN regularly to ensure it meets your current needs. Like your Will, it is particularly important to review your nomination if:
- you get married or divorced, or enter or leave a defacto relationship,
- your family changes, for example with the introduction of children or grandchildren, and
- one of your nominated beneficiaries dies.
If your nomination in your super fund lapses every three years, you should diarise the date it lapses and review it each time.
There are legal and tax implications that can arise from making a BDBN and it is important to understand these before you make one. Our experienced Wills and Estates team can provide advice on BDBN’s. Get in touch to make an appointment.
*The legal information in this article is of a general nature only and not intended to be legal advice to rely upon