Who are your beneficiaries

While I am not a lawyer and cannot provide legal advice, I do always urge clients to have an up-to-date will and to ensure they revise their will whenever there is a major life event such as an inheritance or change in life partner or when they seek financial planning advice.

This is particularly important these days as even modest estates owned by ordinary Australians can be worth millions of dollars, after their home and super is fully valued, and sadly this boost in valuations has prompted a rise in legal disputes over deceased estates.

One mechanism that can help ensure money from an estate flows directly to a specific loved ones or several loved ones, and which in the normal course of events, can’t be disputed, is listing a beneficiary on your superannuation account.

This is done by simply completing a form from your super fund. This will give you the option to name a beneficiary or multiple beneficiaries and determine the percentage of the funds held within your super account at the time of your passing, should be paid to them.

There is no charge for putting in place a beneficiary nomination and it means that on your passing the trustee will look at the nomination, liquidate your super fund and pay the monies directly to the nominated individuals.

As the funds do not pass to your estate, they cannot be challenged or disputed.

If you don’t make a nomination, the trustee of your fund will decide who receives these funds and they can choose to distribute the funds either to your dependents OR to your estate, for distribution in accordance with your will.

Importantly, you can’t just nominate anyone. Generally, you can only nominate a dependent. This will include your spouse or de facto spouse, your children including step and adopted children, or a person who lives with you in a close personal relationship such as a personal carer.

A nomination can be binding, where the trustee of the fund must ensure that the funds are paid to the person nominated and no-one else. Typically, this must be done in writing and be signed by a witness.

Non-binding nominations are being phased out, but they give the trustee the obligation to consider paying funds as directed but not a legal instruction.

The other types of nominations are lapsing and non-lapsing. A lapsing nomination needs to be formally updated every three years while a non-lapsing is a permanent nomination unless you decide at some point to revoke it.

Again, this can be easily done by just completing new paperwork with the new information and ensuring it is received and implemented by the fund. So if you don’t n ow who the  beneficiaries are of your super fund make November the month you learn.