What happens to your super when you pass on?

Many assume when they pass on their super will automatically pass to their nearest family or loved ones in line with their will but as several high profile reports in the media recently show, this is not necessarily the case.

As superannuation balances across the country rise, so to have the number of challenges as to who should receive someone’s super and with this, super trustees are making some questionable decisions regarding pay-outs.

So how can you avoid your wishes regarding your super being challenged. Firstly, you need to leave clear instructions with your superannuation fund as to what your wishes are by ensuring you have completed a death benefit nomination form.

This will give you several options to consider. You can nominate your legal representative, and this effectively means your super will automatically form part of your estate and be distributed in line with your will.

If you have asked a lawyer to help with your will, then he should have already raised with you what your instructions are regarding your super and suggested this as the most appropriate strategy. If they haven’t, then you should go back and check.

The other option you have is to complete the death benefit nomination yourself and specifically choose the person or people your want to inherit your super, although most super funds will only allow you to nominate a child or spouse or de facto.

You then need to decide whether your nomination is binding, that is where it can’t be questioned or changed by the trustee of the super fund, or non-binding where it is more like a suggestion to the trustee that this is where you would like the money to go.

In most situations, the trustee will follow these wishes detailed in a non-binding nomination, but these nominations can be open to challenges should you have someone near to you who believes they have been wrongly excluded.

Binding nominations can’t be challenged but they are more onerous to put in place. Depending on the super fund, they normally have to be regularly updated, signed ink to paper and usually they need to be witnessed.

However, a successful binding nomination cannot be challenged making them an ideal way of leaving funds to say a child from a previous relationship or a new partner in your life.

If you’re not sure what will happen to your super when you die, this might be a good time to call your super fund and ask them to check what they have on file for you and if you are concerned, consult a solicitor.