You may be surprised to find out that your superannuation (and any life insurance you hold within your superfund) is not automatically dealt with under your will as part of your estate. There are strict rules about who may receive your superannuation benefits when you die, as well as how you make this determination. If you do not comply with these requirements, your superannuation fund may make the decision to pay your benefits to someone you would not wish to receive it.
There are only certain classes of people who can be paid your superannuation directly from your super fund. There are also different amounts of tax payable depending on who receives your super. Tax is typically not payable where your superannuation is paid to a dependent, such as your spouse or minor children. If a non-dependent receives your superannuation, the rate of tax payable on certain components ranges from 15% – 30% plus the 2% Medicare levy, depending on how it is paid.
It is important to make sure that you are fully aware of who can receive your superannuation and how you need to make that nomination. A lot of us do things online now but, just because you nominate a person online to receive your benefits, that nomination may not be binding on your super fund’s trustee and it could decide to pay your benefits to different people.
The recent case involving Ashleigh Petrie, a former clerk of the Victorian Magistrates’ Court, highlights this. Ms Petrie made a death benefit nomination in favour of her mother. However, following Ms Petrie’s tragic death, her superfund made the decision to pay her death benefits to her ‘de facto’, a former Magistrate, 45 years her senior. That decision is now being appealed but it may be found that her mother was not an eligible dependant and may never have been legally able to be paid the death benefits. Had Ms Petrie made a binding nomination to her estate and then gifted her superannuation to her mother, the current legal proceedings may have been avoided. Of course, her spouse might still have lodged a family provision claim against her estate.
The most recent statistics from APRA show that there is more than three trillion dollars invested in our superannuation system, which does not include the proceeds of any life insurance policies.
If you want to ensure that your share of these funds is received by your intended beneficiaries, contact one of our experienced estate planning lawyers at de Groots to work with you to achieve your desired outcome.
Kate Donnan, Associate