Contrary to what many may think, superannuation is not like money in a bank account. While proceeds of a bank account will simply be divided according to your Will, superannuation (at least initially) falls outside your estate and may not be governed by your Will.
When you pass away, normally the trustee of your superannuation fund will decide to whom to pay your superannuation balance (also known as a ‘death benefit’). Having said that, under Australian superannuation legislation, the trustee of your superannuation fund can only pay your death benefit to certain people (i.e., a spouse, children, dependents, or your estate via your legal personal representative). As such, a superannuation trustee cannot, for instance, normally pay your death benefit to your mother or a friend.
However, if you don’t want the superannuation trustee to have that discretion, you can usually make something called a ‘binding death benefit nomination’ (or BDBN). This document is like a Will but just for your superannuation and, like a Will, it has requirements that need to be complied with either under legislation or the rules of the superannuation fund. In the binding death benefit nomination, you can specify who you want to receive your superannuation death benefits. If you want your superannuation to form part of your estate (and therefore be governed by your Will), you should nominate your legal personal representative.
If you require further advice about ensuring your superannuation ends up in the right hands, please contact us today.