Who gets my super when I die? by Steve Marsten

I was asked recently – “who gets my super when I die?” Often it can come as a surprise to know that the payment of your interest in a superannuation fund is not always governed by your will, but rather your Binding Death Benefit Nomination (BDBN).

Many people don’t realise that superfunds are really just a special type of trust and they have to comply with numerous rules and regulations, hence your interest in super is an interest in a trust and your rights are therefore governed by the actual Trust Deed document.

Even more disconcerting is to know that you do not personally own the wealth in your super even if it’s a Self Managed Superannuation Fund (SMSF). The Trustee(s) have the discretion over the payment of benefits from the superfund and as a result; sometimes your super instructions will override your will. You see - your will cannot deal with the SMSF interest unless the Trustees of the fund, in their discretion, decide to pay the superannuation interest on your deceased estate.

Trust Deeds set out various circumstances under which the trustee will usually follow a direction given by you. That Direction is best given by a BDBN. Hence a BDBN tends to support a will and it is advised to have both.

Trustees tend to be contractually bound to follow BDBN in paying death benefits from the fund. That said, it’s often recommended to make your Death Benefit Nomination a Binding Death Benefit Nomination.

The other important thing to note is – do not let the BDBN lapse! Usually this should be renewed every three years. Organised Financial Planners will make sure their clients BDBN’s never lapse.

And finally, some BDBNs can implement special and creative strategies for SMSF’s such as creating a life estate over the super interest in favour of your spouse or provide contingencies for children etc. as long as the SMSF Trust Deed is kept up to date, BDBN strategies can usually be built into a BDBN.

To discuss estate planning and superfund issues, call Sothertons and Professional Investment Services on 4972 1300 and speak to our Directors.