Aug 15, 2018  | Tags: estate planning, Will, Superannuation

Our Insights

One of the biggest things people overlook when drafting their Will is their superannuation. What many people don’t know is that your superannuation does not automatically become part of your estate. Superannuation can be the next largest, or the only other asset, after the main residence so it’s important that it ends up in the right hands.

Why doesn’t my Will automatically cover my super?

Your super isn’t covered by your Will as your Will typically takes into account assets owned in your name – for example, investments, personal items, your house, savings, cars, etc.

Super is different as it’s held for you in a trust by the trustee of your super fund and governed by superannuation law. Hence different rules apply and why it’s important that you keep your instructions with your super fund up-to-date.

Who can I leave my super to?

Your super is your money and providing you plan correctly, you can decide who gets it in the event of your death. This is a prime example of why estate planning is vital.  

Your super fund needs to pay a benefit to your dependents as they’re the only ones who can directly receive your super.

Your super beneficiaries may include:

• Your spouse or partner
• Your children
• Anyone who is financially dependent on you at the time of your death
• The executor of your estate or personal legal representative.

It’s important to note that you can split your super between people. Clear details of whom and the proportional share need to be noted. 

How do I nominate my beneficiaries?

Your super fund will give you several options, but you will need to put a binding nomination in place if you wish to nominate someone who is not a dependant under superannuation laws, for example, your parents, siblings or a charity.  Your legal representative can assist you with your binding nomination, and you should consider the following when putting it in place:

• Confirm your super fund permits binding nominations
• Check those you’re nominating are eligible 
• If you wish to nominate a legal representative, make sure your will is up-to-date
• Complete and sign a binding nomination form
• If your nomination is due to expire, be sure you renew it before it lapses.

What happens if I don’t nominate a beneficiary for my super?

While this can vary from fund to fund, if no beneficiary is nominated, the trustee can choose how to pay your super benefit. The trustee will be guided by super law should this occur.

Will the super pay-out be taxed?

Superannuation death benefits are tax-free when paid to your dependants, however a ‘death tax’ does apply when super monies are paid to those not considered dependants. Whether or not your super is paid as a lump sum can also impact how it’s taxed.

A tax dependant includes:

• Your current and former spouses and defacto partners
• Any children who are under the age of 18
• Any other financial dependants.

What's next?

It is crucial to get advice about estate planning. Talk to your financial adviser and estate planning lawyer, and don't wait a moment longer!

Start by talking to the team at Calder Wealth Management.

Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Ben Calder, Private Client Adviser at Calder Wealth Management.