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DO YOU KNOW WHO BENEFITS FROM YOUR SUPER?

Do you know the difference between a binding and non-lapsing super death benefit nomination? Do you have a nomination in place for your super? We take a look at how they work and why it’s a good idea to have one.

Super is one of the biggest assets you’ll accumulate in your lifetime, so it’s important to make sure you get to decide what happens to it. Contrary to what you might think, your super isn’t automatically included in your estate and paid to your loved ones if you pass away.

If you don’t nominate how you want your super distributed, then the trustee of your super fund will decide who your super goes to – and it may not be the person or people you had in mind.

BINDING VS NON-LAPSING DEATH BENEFIT NOMINATION
 There are two main types of super death benefit nominations: binding and non-lapsing. Both nominations let your super fund know which of your eligible beneficiaries should receive your super balance and any life insurance held in the fund if you die. But there is one key difference between the two.

A binding death benefit nomination must be confirmed at least every three years. If you don’t confirm your nomination within this timeframe, it will become invalid.

A non-lapsing death benefit nomination never expires. Most super funds – including Colonial First State – allow you to make this type of nomination.

WHO CAN YOU NOMINATE?
 You can nominate your legal personal representative (the executor or administrator of your estate) to receive your super benefit and it will then be distributed along with the other assets in your Will. Or, you can choose to nominate specific beneficiaries. These beneficiaries must be your dependants. This means:
  • your current spouse (married or de facto)

  • your child (biological, adopted or step-child)

  • any person who is financially dependent on you

  • any person with whom you have an interdependency relationship.

There is often confusion about what an interdependency relationship means. The criteria for this type of dependant is that you live together, you have a close personal relationship, and you provide each other (or one of you provides the other one) with financial support, domestic support and personal care. This could include an adult child living with and caring for their parent, or two siblings living together.

Regardless of the type of nomination you have, you should review it every year and update it if your circumstances change – for example, if you get married or divorced.

Having a valid nomination in place could make a world of difference to your loved ones during a distressing period, so it’s worth taking the time to get it sorted.
TOP TIPS FOR FILLING OUT YOUR NOMINATION CORRECTLY
 Your nomination must be witnessed by two people who are over 18. They can’t be the beneficiaries in your nomination (including your Power of Attorney) as this will make your nomination invalid.
  • You and your witnesses must sign and date the form at the same time.

  • If you need to make a change to the form after you’ve completed it, you and both of your witnesses will need to put your initials next to the change.

  • If you want to nominate an interdependent, it may be beneficial to complete a statutory declaration to provide evidence of this relationship.

  • If you’re unsure about any aspect of your nomination, ask your financial adviser for help.

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