Superannuation is becoming a significant asset for people to consider when making their Wills. Unfortunately, it is becoming more complex and it is important that when making a Will you understand the consequences of your Superannuation. BJT Legal have prepared this guide to try and explain the steps that apply on the death of a person when they have funds within a superannuation investment. This is a guide only and should not be treated as legal advice.
WHAT ARE A PERSON'S ENTITLEMENT ON DEATH
A death benefit from a Superannuation Fund may consist of:-
1. The deceased members balance in their Superannuation Fund account, which can include the members contributions as well as the employers contributions and any other amounts rolled over from other Superannuation Funds, and
2. Any life insurance benefit which was taken out through the fund (Not every fund has a life benefit)
Who is entitled to receive the Death Benefit?
The Superannuation Trustees can only pay the Death Benefit from the Superannuation fund t-
1. The dependents of the deceased, as defined by legislation or,
2. The deceased's Estate, being provided for in their Will, or pursuant to the Law if no Will is made.
A "dependent" under the legislation means:-
1. The spouse of the member which can include a de-facto spouse,
2. Any child of the member, which can include step-children, adopted children and any child of the deceased born after the deceased's death, and
3. Any person who the Trustee considers was wholly or partially financially dependant on the deceased at the time the deceased's death.
The Superannuation Trustees are the persons who decide who is entitled to the Superannuation funds as explained above. Many members nominate a person on taking out their Superannuation. That nomination is simply a guide to the Superannuation Trustees and will not bind the Trustees in their decision.
In some very few Superannuation Funds, there is provision to make a binding nomination that would bind the Trustees to follow the nomination in certain circumstances. Very few Superannuation Funds have this provision.
TAX ON DEATH BENEFITS
Superannuation Tax is complex and dependent on each individual circumstances. In most cases, if a benefit is paid t-
1. The spouse,
2. A child of the deceased under 18 years,
3. Any person financially dependant on the deceased at the time of death,
there is no tax payable.
If the benefit is paid to any other person either through the Estate or directly by the Trustees who do not fall within the group of people above, then tax can be quite substantial. SUMMARY
It is important that if you wish your Superannuation to be dealt with differently than at the discretion of the Superannuation Trustees, then you should firstly make enquires with your Superannuation Fund Manager to find out what are the procedures that apply on your death and speak to our Wills Specialist to ensure that everything is done to ensure your wishes are followed.
ANDREW BYRNE ACCREDITED WILLS AND ESTATES SPECIALIST BJT LEGAL Ph. 5333 8888 e-mail: email@example.com