Superannuation: Your binding death benefit nomination

Ensure that after your death your superannuation is paid to who you want

What is a Binding Death Benefit Nomination?

A binding death benefit nomination is a direction you sign to the trustee that sets out the beneficiaries who you want to receive your superannuation benefits upon your death.

First, a story to tell. Paul and Greta were in their late 30s with 3 young children and had a lovely home on Sydney’s North Shore. Paul’s high income as an account executive for a large company adequately covered the substantial mortgage payments. Greta was a full time mother.

Tragedy struck when suddenly, Paul died of a brain haemorrhage. His superannuation amounted to around $500,000. Greta thought that as the sole beneficiary of Paul’s Will she would also receive all his super.

Imagine the shock when Greta was informed by the trustee of Paul’s super fund that as Paul had not signed a nomination, the superannuation benefit would not be paid to Greta but would be held in trust for the children. So far as the super was concerned, Paul’s Will, though valid, was irrelevant.

Faced with a huge mortgage to pay, Greta felt compelled to take legal proceedings against the trustee.

The Importance of a Binding Death Benefit Nomination

Unless your super fund is holding a valid nomination, when you die, the fund has discretion as to whom your super benefit is to be paid. As in the story above, the trustee’s decision may not always result in a distribution to who you expected.

By nominating who should receive your benefit, you will avoid the predicament that confronted Greta. A binding death benefit nomination removes the uncertainty about who receives your super and helps you manage your estate planning process more precisely and effectively.

By having a binding death benefit nomination in place, costly and time-consuming proceedings by dependants making competing claims on your super benefit, can be avoided.

Who can I nominate?

For a binding nomination to be valid the nominated beneficiary must be:

  • Your current spouse / partner
  • Your children of any age (including adopted / step children)
  • Anyone financially dependent on you
  • Any interdependent
  • Your executor / administrator – so that the entitlement is paid to your estate

How long does it last?

Typically a binding nomination is valid for three years *. Your super fund should advise you when your nomination is about to expire. You may cancel your nomination at any time.

How do I make a binding nomination?

Signature is similar to executing a Will. You need two witnesses who are not beneficiaries, aged 18 or over. The form must specify the nominated beneficiaries and their respective proportions for payment. Download the form from your fund’s website.

You need to ensure that you have considered the needs of all your dependents when it comes to distributing your assets.

Superannuation and my Will

Greta was unaware that Paul’s estate and his super would be treated differently. Unfortunately as Paul had not signed a nomination the trustee’s discretion was paramount.

In preparation for your conference with one of the Best Practice Lawyers regarding your estate planning arrangements do ensure that you have a current binding death benefit nomination.

Contact a Best Practice Lawyer today to seek assistance with your estate planning arrangements

* A super fund may have its own rules regarding the duration of the Nomination

Does divorce always end in court?

When couples separate, the first question they are likely to ask is whether they need to go to Court in order to get a divorce. The simple answer to this is “no”. Whilst a Divorce Application must be filed with the Court to initiate the divorce process, this does not necessarily mean that a person must physically appear before the Court. The only time that an applicant will be required to be present at Court is when there are children below the age of eighteen (18) years.

The rationale behind this is that the Court, in considering whether or not to grant a divorce, must ensure that there are suitable arrangements in place for the children of the marriage. This does not particularly require parents to have a formal parenting plan or parenting orders in place. So long as the Court has sufficient evidence before it detailing the existing care arrangements for the children, it is less likely to question the parties with respect to parenting arrangements. The Court is well aware that circumstances change and the living conditions for children may vary with age, changes in residence, children’s growing needs and schooling commitments. The Court’s primary consideration is to ensure that any existing or proposed parenting arrangements meet the best interests of the children.

Very often, people engaged in parenting or property proceedings are under the misconception that a divorce will not be granted until those proceedings have been resolved. This is not true. Hearings dealing with the dissolution of the marriage (divorce) are separate to parenting or property proceedings. The Court will grant a Divorce Order even if the parties are involved in ongoing litigation.

As far as the law is concerned, the Family Law Act 1975 founded the principle of no-fault divorce in Australian law. This means that a Court is not interested in the marriage ending. The only ground for divorce is that the marriage has broken down irretrievably. That is, there is no reasonable likelihood that the parties will reconcile and get back together. As a pre-requisite, parties must have been separated for at least 12 months and one day in order to satisfy the Court that the marriage has broken down irretrievably.
To apply for a divorce, you are required to complete an Application for Divorce and file it with the Family Court and pay an Application fee which is currently $845. If you wish to obtain more information on the process of applying for a divorce, we invite you to contact our office to speak to one of our experienced practitioners who will be able to assist you with your enquiries and canvass any issues in your personal circumstances.

Wills are the full and final wishes of a deceased – or are they?

Many people assume that if a deceased had a will then there is nothing that can be done to challenge the will or amend who may receive a benefit from the deceased’s estate. However, this isn’t quite true.

There are two main issues that can be explored when assessing whether the deceased’s will is the final word on their estate.

Challenging the will on a technical ground

A will can be challenged on a number of grounds including but not limited to fraud, lack of capacity on behalf of the will maker, undue influence, forgery or lack of the will maker having knowledge and approval of what is contained in the Will.

However, in order to have an ability to challenge the will on such grounds a person must show that they have an “Interest” in the deceased estate. That means you must have either an entitlement in a previous Will or an entitlement on Intestacy (if there is no Will) and you are entitled to a share of the deceased estate by way of your State Legislation.

Being left out of a will or not receiving a full entitlement under a will

If you are an eligible person you have the right to contest the will and make what is called a family provision claim. Eligible persons include:

  • a person who was the wife or husband of the deceased at the time of death,
  • a person with whom the deceased was living in a de facto relationship at the time of the death,
  • a child of the deceased,
  • a former wife or husband of the deceased,
  • a person:
    • who was, at any particular time, wholly or partly dependent on the deceased, and
    • who is a grandchild of the deceased or was, at that particular time or at any other time, a member of the household of which the deceased was a member,
  • person with whom the deceased was living in a close personal relationship at the time of the deceased’s death.

However this does not mean that an eligible person will automatically succeed in their claim. Their rights to family provision will involve the consideration of many factors including:

  • their relationship with the deceased;
  • any obligations or responsibilities owed by the deceased to them;
  • the size and content of the estate;
  • their financial circumstances;
  • their age;
  • any disability that they may have;
  • other beneficiary’s rights; and
  • many other factors.

If you think that the will of a loved one who has passed is not the final word on their estate, please contact your Best Practice Lawyer for expert advice.