Death Benefit Nominations for Your Super
Unlike your other assets, your super and any insurance benefits you have aren’t considered part of your estate. That’s because your super is legally considered to be held in trust until you are eligible to access it. Even if you don’t have a lot of superannuation, if you have death insurance, the payment could be substantial and therefore important to consider who should receive these funds.
If you don’t nominate a beneficiary, your super fund will follow relevant laws to decide who receives your balance. This could be either one or more of your dependants, or your legal personal representative. Nominating a beneficiary now can provide clarity about who you want to receive your super if you die and help avoid arguments between your loved ones.
Most super funds let you nominate a beneficiary as either a non-binding or binding nomination. Your beneficiary could be:
- your spouse or partner
- your children
- someone in an interdependent relationship
- financial dependants
- your estate or legal personal representative.
Depending on their relationship to you, your beneficiary could pay tax on the money they receive. If the beneficiary is considered a financial dependant, they could qualify as a dependant for tax purposes, and therefore receive the benefit tax free. If someone not considered a financial dependant for tax purposes – such as a financially independent adult child – they may need to pay tax on some of the benefit.