Most people are familiar with the idea of leaving the house, the boat or the stamp collection to someone in (or sometimes outside of) their family through their will. But what about superannuation – what happens when you die and how can you make sure that people aren’t unreasonably disappointed?
The assets that you own form your estate and are distributed according to your will. You can choose to give your assets to anyone. If you don’t have a valid will, your assets are distributed according to legislation. Your assets are property you own personally like bank accounts, shares, managed funds, real estate and lifestyle assets (such as cars and boats). Assets held by companies or in trusts do not form part of your estate.
Although superannuation is held in your name it’s not yours – the super fund trustees hold it in trust for your benefit. If you die, superannuation legislation requires them to pay the money to your dependants. This means to your spouse, your children, someone who is financially dependent on you or someone living in an interdependent relationship with you.
The aim of this legislation is to enable the trustees to pay out the super quickly on the production of a death certificate. In most cases, this is quicker than finalising your estate. Sadly, in some cases, family disputes mean that even a superannuation payment is delayed.
What can you do?
It is important to know that the super fund trustees should consider the intentions of your will in making a decision, so make sure you have one and that it is up-to-date. You might also be able to instruct the trustee directly of what you want to happen, under a “binding nomination” or similar facility.
It is also worth thinking about telling your beneficiaries what you intend, as this will give them the chance to prepare for the outcome rather than be surprised at a difficult time. And, as always, seek advice on a tailored plan for your personal circumstances.