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


Stay Connected

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

Police investigating Ballina incident

Do you recognise this man? Police would like to speak with him.

Can you identify this man?

Rubbish collections back on agenda

BULKY RUBBISH: A Ballina Shire mayoral candidate has raised the issue of kerbside collections for the region.

Kerbside collections of bulky rubbish on the agenda

Latest deals and offers

Legal poppies will make you die, not high

A NEW crop will be popping up across the state after all sides of politics agreed to lift a ban on poppy seed farming for medical use.

Police investigating Ballina incident

Do you recognise this man? Police would like to speak with him.

Can you identify this man?

Rubbish collections back on agenda

BULKY RUBBISH: A Ballina Shire mayoral candidate has raised the issue of kerbside collections for the region.

Kerbside collections of bulky rubbish on the agenda

Battle over North Coast lake road continues

BATTLE FOR ROAD: Lennox Head's Stop the Lake Road Closure committee spokesperson Pip Carter (back, left) with NSW Minister for Sport, Stuart Ayres who has described the decision to close the road as odd.

Battle to keep road open is not over

Local teen actor to star in cult horror

Nicholas Hamilton.

Nicholas Hamilton, 16, has cemented his Hollywood career

John Williamson winding up for another Gympie Muster

John Williamson is bringing some new songs and artists to this year's Muster.

John Williamson is back and ready to put on his best show ever

John Krasinski has better sex now he's in good shape

John Krasinski says there's at least one good reason to get jacked

Kanye West gets 'free reign' at VMAs

Kanye West has been let off the leash for the VMAs

Robbie Williams sings at manager's funeral

Robbie Williams and Lamar sang at the funeral of their manager

Twice as much Troy will please country music lovers

CATCH HIM WHILE YOU CAN: Singer Troy Cassar-Daley plans to take some time off to spend with family next year.

TROY Cassar-Daley is releasing a new album and book.

Courtney Stodden gets Reborn Doll

Courtney Stodden is trying to get over her recent miscarriage

Kate McKinnon 'destitute' before SNL

Kate McKinnon says she can't do anything but act

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale

The "correction we had to have" in Gladstone's rentals

UPWARD MARCH: The rental vacancy rate in Gladstone has improved for the first time in more than a year, providing a confidence boost in the market.

Vacancy rates improve with signs that things are getting betterF

ISLAND FOR SALE: Cheap Fraser Coast island drops price again

Suna Island in the Great Sandy Strait will be auctioned by Ray White Hervey Bay on Saturday morning.

This is the cheapest island you will find for sale in Australia

How a family home can fit on a 250sq m block

This is what you can build on 250m2.

Here's the floor plan of a home built on 250sq m

Investors eye Gladstone's $4m island with resort approval

UP FOR SALE: Turtle Island is on the market.

CHINESE and Sydney investors flag interest in Gladstone island.

Take a sneak peek at this $19m Whitsunday mansion

Mandalay House features a private helipad.

Mandalay is currently on the market with an asking price of $19m