Money

Certainty for your super

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.
Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.

AS our system of employer paid superannuation continues on, many working Australians will amass a significant super nest egg over their working life. It's important to have certainty over who inherits your super savings if you die prematurely because super cannot be bequeathed to loved ones in the same way as your home or other assets.

Australia has a vast pool of superannuation savings, currently estimated to be worth around $1.3 trillion. We often assume that our super will form part of our estate when we die and that the cash will be distributed in line with our will. But super doesn't work this way.

Unlike other assets that make up our personal estate, your super cannot always be passed on through your will.

Strictly speaking, the trustee of your fund can decide who receives your super if you die, and the trustee's decision may not reflect your wishes.

To be quite sure about who inherits your super, it's worth asking your fund about making a 'binding death benefit nomination'. It's an option many funds offer at no charge.

Binding nomination give you the certainty of naming those dependents you would like to receive your accumulated superannuation.

The key word here is 'dependents', and this normally means your spouse or partner (including a same sex partner), your children or someone else who is financially dependent on you at the time of your death. You can also nominate a legal representative, which for most people is the executor of their estate.
 
You can choose to split the money between your dependents as you see fit. But it's important to specify exactly how you want the money divided up.

If you don't have a binding nomination, your fund trustee can divide your super savings in the way that it believes is fair.

Unfortunately, making a binding death benefit nomination isn't a set and forget matter. These nominations are only valid for three years so it will need to be updated reasonably regularly.

That's not always a bad thing as our circumstances can alter and you could have a change of heart about who you'd like to inherit your super.

You can adjust your binding nomination at any time but remember, if the nomination expires your trustee may pay out your nest egg as if you had never entered a binding nomination at all. That said, your fund should send you a renewal notice when the nomination is about to expire.

As with many aspects of superannuation, there can be varying tax implications for super payouts received as an inheritance. That makes it worth speaking with your financial adviser or lawyer before making a final decision regarding a binding death nomination.

Organising a binding nomination is a matter of filling in a form provided by your fund, and in many cases you can download the necessary paperwork from your fund's website.  It's worth the effort for the certainty it gives you and your family, and along with having a valid will, it's something that plays an important role in your estate plans.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.

Topics:  clitheroe, superannuation


Join the Community.

Get your local news, your way.

Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Backpacker tax: Cut it in half or scrap it?

Janelle Saffin and Shadow Minister for Rural Affairs Joel Fitzgibbon discuss the proposed backpacker tax outside Janelle’s office.

Shadow Minister Joel Fitzgibbon: Backpacker tax should be scrapped.

Family’s faith in Evans Head restored after van theft

Hayden Mallia and Kerrie Mann, of Evans Head, had their van stolen with everything in it after moving from Melbourne.

Their van containing all their valued possessions was stolen

Clarence brigades fired up over safety

EASY: Sjaak Ankersmit, of Shark Creek, learns how to use the fire hose at Yamba Fire Station.

Grafton FIre Brigade opened its doors to the community

Latest deals and offers

FitzSimons brings Republic mission to Northern Rivers today

THE Australian Republican Movement’s National Chair Peter FitzSimons AM will be speaking in Lismore and Ballina today as part of the ARM’s grassroots campaign.

Backpacker tax: Cut it in half or scrap it?

Janelle Saffin and Shadow Minister for Rural Affairs Joel Fitzgibbon discuss the proposed backpacker tax outside Janelle’s office.

Shadow Minister Joel Fitzgibbon: Backpacker tax should be scrapped.

Family’s faith in Evans Head restored after van theft

Hayden Mallia and Kerrie Mann, of Evans Head, had their van stolen with everything in it after moving from Melbourne.

Their van containing all their valued possessions was stolen

Clarence brigades fired up over safety

EASY: Sjaak Ankersmit, of Shark Creek, learns how to use the fire hose at Yamba Fire Station.

Grafton FIre Brigade opened its doors to the community

Lismore stables hack big numbers

Kimberly Webb of Willow Vale, Gold Coast participating in the Northern NSW Hack Championship, Lismore showground.

More than 300 horses stretched the Lismore Showgrounds

Revealed: Five easy ways to lose weight

The Australian Dietary Guidelines recommend fruit as part of a healthy, five-food group diet.

Which diets work and which ones don't?

Vanessa from the Northern Rivers, Vivid queen of Sydney

LOCAL LADY: Tobin Saunders as the outgoing Vanessa Wagner.

BALLINA-based gender illusionist Vanessa Wagner at Vivid

IBAC Evidence Police Bashing 5

Officers drag the woman back to her cell

In this video the woman drinks water from the toilet.

IBAC Evidence Police Bashing 4

In this video the woman asks for water as the tap in the room is broken

IBAC Evidence Police Bashing 3

In this video police continue their search and male officers are present despite...

Perfect time to invest in Northern Rivers property

The Northern Rivers rental market is tighter than Sydney making it the perfect time for investors to get better returns out of property than superannuation or banks deposits.

Low interest rates and tight rental market are prime time to invest