Make your Wishes Binding
It is commonly known that a current and valid Will ensures that your assets will be distributed as per your wishes upon your passing. What is not so commonly known is that superannuation fund death benefits do not form part of your estate and as result you are generally unable to use your Will to directly specify to whom the benefit is paid.
Most people mistakenly believe that by nominating an intended recipient to their super fund that this is a binding nomination or that their benefit will be paid out according to their Will.
This is not the case. The person or persons that you nominate to your super fund is considered a preferred nomination and as such is not binding. This essentially means that other family members are able to dispute against the nominated recipient receiving the payment as the deceased had intended.
The most common circumstance where a dispute is likely to arise is where the person who has passed has remarried. Often the children from the first marriage believe that the benefit should be theirs and not given to the most recent partner.
From the super fund’s point of view, unless a binding nomination has been made, it is likely that the benefit will be paid to the surviving partner. The intention of a super fund is to finance a person, or a couples, retirement and it is assumed that the deceased and their partner at that time would have utilised the funds together in their later life. Therefore the surviving partner should not be deprived of the benefit from those funds.
Where the situation gets tricky is that not all super funds offer the option to make binding nominations. There is the choice of switching to a fund that has this option but that may not always be practical. Alternatively, if the fund member wants to leave their benefit to a charity or perhaps their grandchildren they can make a binding nomination to leave the benefit to their estate and then the funds will be distributed as per their Will. Another way to deal with this is that the member can acknowledge that the death benefit will be paid to their partner and can then structure their Will such that all other assets are left to the children or other parties of their choosing.
Whilst most do not like to think about dying and making arrangements for what will happen when we do, it is extremely important to plan for what you want to happen with your assets when you die. Failure to express your intentions and have them correctly documented so that they are binding could cause a lot of emotional and financial stress to those loved ones that you leave behind.
For more advice on binding nominations for your death benefit or to discuss Wills and other estate planning queries contact The Quinn Group on 1300 QUINNS or click here to submit an online enquiry.