According to the Association of Superannuation Funds Australia (ASFA), at the start of 2020 Australian superannuation assets totalled $3 trillion with 2019 a 13% increase in total superannuation value
While superannuation balances may have taken a hit given the current COVID-19 crisis and its effect on global share markets, it is still likely, however, one of your most significant assets which require deep consideration when you are estate planning.
Have you thought about what will happen to your super after you are gone?
We find that superannuation is either forgotten about when people are thinking about their estate, or alternatively, it is considered as just another asset. However, it is important to know that how superannuation is treated on your death may be different from the rest of your estate.
Who superannuation is paid to on your death is generally up to the discretion of your superannuation fund trustee, however, this is not always the case.
How do you ensure that the right beneficiary will be paid your superannuation when you die?
Firstly, find out what your superannuation fund’s policy on death benefit payments is. This can often be found within the fund’s public website or through your member portal. Most funds will allow you to nominate a preferred beneficiary however not all do. If you are a member of a government superannuation fund such GESB (formerly West State Super or Gold State Super), PSS, CSS and Military Super you will not be able to nominate a beneficiary and your superannuation will be paid in accordance with the rules of those funds.
If your superannuation fund will allow you to nominate a beneficiary you should also consider whether this nomination is binding or non-binding. Before making any nomination, you should also receive advice about who is able to be a beneficiary for the purposes of your superannuation nomination. Superannuation can only be paid to dependants, and this has a very specific meaning within the context of the superannuation legislation.
Knowing how your fund will pay your superannuation means that you will be able to make considered decisions for your superannuation as part of your estate planning strategy.
The importance of regular reviews.
It is recommended by both lawyers and financial planners that you review your superannuation and who it will be paid to in the event of your death in conjunction with a Will review. Failure to consider how superannuation balances will be paid on your death may have a significant impact on your estate planning. Depending on how any superannuation death benefit is paid on your death may mean that your estate is significantly larger (or smaller) than you contemplated when making your Will. This may mean that your Will doesn’t really distribute your estate in the manner you wanted.
It’s important to keep your Will and your superannuation nominations up to date, to ensure your assets go to your preferred beneficiaries.
If you would like some further information, we have previously discussed the Administration Act 1903 (WA) and what happens if you die without a Will in this previous article and when it is imperative to review your Will from time to time.
How can HHG Legal Group assist?
Our Wills, Estate and Succession Planning team will be able to discuss with you what any non-binding nomination or binding nomination you have made in a superannuation fund means and how this may affect your estate planning strategy. To get considered and holistic estate planning advice please contact our estate planning team to start the conversation.
To make an appointment with one of our lawyers, please call 1800 609 945 or fill in the online form on our Contact Page and we will call you back.