Will & Binding Death Nomination

Having a Will can prove extremely important, even if you do not have many assets in life. Many people do not realise that Superannuation policies often include death benefit payments to the dependents of the deceased policy holder or to the deceased’s Estate, which can be hundreds of thousands of dollars.

Importance of a binding death nomination

Superannuation policies are effectively trusts whereby the policy holders are beneficiaries of the fund, and the Superannuation Trustee is the owner. Because policy holders are not owners of the assets in their policy, the amount in the policy does not automatically form part of their Estate. In accordance with the Superannuation Industry (Supervision) Act 1993, and the terms of the relevant Superannuation Trust Deed, unless there is a binding death nomination in place, a Superannuation Trustee has complete discretion to pay any available death benefit to either the Estate, a child or spouse (including de facto and same sex spouses) of the deceased, a financial dependent of the deceased or someone in an interdependency relationship with the deceased. If the deceased has failed to make a binding death nomination but has at least drafted a Will, this may allow for one less person to have a claim on the Superannuation death benefit.

What can happen if there is no binding death nomination in place

In a recent matter, a client lost his de facto partner due to unexpected medical complications. The deceased did not have a Will. However, given that they had been in their relationship for less than 2 years and the relationship did not result in the birth of a child, the client did not qualify under the definition of spouse in the Succession Act and was unable to file for Letters of Administration of his partner’s Estate as the Administrator and next-of-kin. This roll then fell to the deceased’s parents. The Estate alone did not hold many assets; however, the deceased held two separate Superannuation policies with death benefit payments which totalled almost 1 million dollars.

Without a binding death nomination, the Superannuation Trustees had complete discretion as to whether to pay the respective death benefit to the Estate, of which the parents were the sole beneficiaries, or the client as the de facto partner, so long as there were no other qualifying dependents. Had the deceased made a Will appointing her partner as the beneficiary of her Estate, regardless of the Superannuation Trustee’s decision, the client would have been entitled to the death benefit.

However, having said this, it is also very important to make sure your Superannuation policy has a valid binding death nomination. In the above example, even if the client had been appointed as the beneficiary under the deceased’s Estate, if there was another dependent of the deceased (financial or otherwise), this again would have left the Superannuation Trustee with the discretion to make the death benefit payment to our client or this other dependent.

Nominations do expire

With many Super policies, even if you have made a binding death nomination in the past, these nominations expire after 3 years. Having a valid binding death nomination is the only way to ensure your intended dependent receives the death benefit under your policy, and drafting a Will is a potential safety net in case you should pass away before you have a chance to renew any expired binding death nominations.

If you wish to draft a Will, or discuss your options with binding death nominations for your Superannuation, please contact Turner Freeman Lawyers on 1800 800 088 today!

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