In a nutshell, your superannuation account balance and any insurance benefits (ie. your “death benefit”) will be paid to your dependents or to your legal personal representative when you die.
Who are dependents?
- your spouse or partner (including same sex couples or couples in registered relationships);
- children (including adopted, step-children and children born outside of marriage);
- persons who are financially dependent on you (whether wholly or partially);
- persons who are in an interdependent relationship with you at the time of your death;
- persons who have a legally enforceable right to seek financial support from you.
Who is my legal personal representative?
Your legal personal representative is either your executor or executors named in your will, or the persons entitled to obtain letters of administration of your estate.
What is an interdependent relationship?
An interdependent relationship exists between two people who share a close personal relationship and live together, and where one or both of them provide financial support and domestic support and personal care.
An interdependent relationship may also exist between persons who share a close personal relationship, but cannot satisfy the other criteria because of suffering from a disability or are temporarily living apart.
Examples of interdependent relationships may include siblings or close friends living together on a long term basis, or adult children caring for a disabled parent, or vice versa.
My children are adults (over 18) – are they still included as a dependent?
Yes they are, however, they may have to pay tax on the benefit if they are over 18, unless they were also financially dependent or in an interdependent relationship with you.
What about tax?
Tax is not payable on superannuation benefits unless it is paid to a non-dependent, whether directly or via the legal personal representative or the estate.
If superannuation is paid to the legal personal representative or the estate where it is then to be distributed in accordance with the deceased’s will or relevant laws, then the legal personal representative is responsible for paying any tax from the estate’s assets.
Can I specify who should receive my super?
Yes you can. Most superannuation funds allow you to nominate who you would like to receive your benefits upon your death. There are two types of nominations; binding and non-binding.
A valid binding nomination requires the trustee of the superannuation fund to pay your superannuation in accordance with your directions, so long as you have nominated dependents and/or your legal personal representative as the beneficiaries.
A non-binding nomination does not require the trustee of the superannuation fund to pay it in accordance with your nomination. They may use it as a guide, but are not bound by it.
Doesn’t my will deal with my super?
Your superannuation will not be paid in accordance with your will unless your benefits are paid to your legal personal representative of your estate and then distributed in accordance with your will.
You may be able to make a binding nomination that your superannuation be paid to your estate, in which case your super can be paid to anyone, even non-dependents. However, there will be significant tax consequences depending on who is the ultimate recipient of your benefits. Your lawyer should discuss this with you.
How can we help?
Turner Freeman Lawyers can assist you with making superannuation nominations, preparing wills that take into account your superannuation benefits, as well as assist you with superannuation claims. Contact us now on 13 43 63.