Beneficiaries for your Superannuation
Posted on 14/08/2016
Estate Planning – Beneficiaries for your Superannuation
Estate planning is an essential part of any financial plan. It concerns the distribution of assets upon your death.
In this part of our three-part series on Estate Planning, we will explore what happens should you nominate a beneficiary for your superannuation and how the process works.
Nominating Beneficiaries for Your Superannuation
It will sometimes be the case that the person who makes the decisions regarding the distribution of funds after your death is the trustee of your superannuation fund. If you nominate a beneficiary to be binding on the trustee, your estate planning can design your estate plan with greater precision.
You are only able to nominate your legal personal representative/estate or dependent to receive your death benefit. Dependent here refers to:
Your spouse (including a de facto spouse)
Your children (including an adult child, adopted child, a step child or ex-nuptial child)
Anyone who is financially dependent on you at the time of your death or
Anyone with whom you have an interdependency relationship at the time of your death.
Generally, superannuation death benefits are tax-free when they are paid to tax dependents, such as a spouse or minor children. If your funds are left to beneficiaries who are not dependents for tax purposes, such as adult children or friends, they will be taxed on the taxable components of any death benefits they receive from your superannuation
A binding nomination is binding on the trustee of the fund. This means the trustee must pay the nominated beneficiaries as directed by you, provided your nominated beneficiaries qualify as dependents at the relevant time.
A binding nomination generally speeds up the payment of benefits upon death.
A binding nomination is valid for up to three years from the date of signing the nomination form. It can become invalid under certain circumstances, such as the marriage, divorce or death of the nominated beneficiary.
It is important that you review and update your binding nomination regularly and as your circumstances change.
In the event that no one is nominated, funds from your superannuation may be regarded as part of your estate and divided according to your Will.
Estate planning is a complex area. We recommend you seek the advice of a qualified professional such as an estate planning specialist to ensure your wishes with respect to your assets are carried out in full.
General Advice Disclosure: This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person.You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.