What’s in a name?

31 August 2018

Your super is likely to be one of your largest financial assets, so it’s important to know that it will be distributed according to your wishes once you’re gone.

It’s not uncommon for members to think that when they die their super will be distributed according to their Will. Yet New South Wales legislation says that unless you specifically state who you want to receive your super – through what’s called a binding nomination – the trustees of your fund will decide who benefits.

Under the legislation, if you don’t have a Will in place, your super will be divided up according to a formula and passed on to one, or a combination of, your dependants – your spouse, your children, people with whom you had an interdependency relationship and those who rely on you financially.

However, it’s a simple process to ensure your super is distributed how you would like. By completing and sending us a binding nomination form, you specifically name who you want to receive your super.

A binding nomination needs renewing every three years otherwise it becomes invalid and the decision on your beneficiaries will revert to the trustees.

When considering who will receive your super, it is worthwhile contemplating the tax implications for your beneficiaries.

While your spouse will have no tax liability when they receive the money, any adult children will be subject to 17% taxation on the taxable component of your super. That’s because unlike superannuation law, they are not deemed to be dependants under tax law.

It might be wiser in such circumstances to elect for your super to be paid into your estate and then distributed to your adult children from there. That way, they may only pay 15% tax and avoid the 2% Medicare levy.

Your spouse can receive your super as either a lump sum or an income stream; whereas your adult children must receive the money as a lump sum.

You have worked hard all your life, so it makes sense to ensure that your superannuation ends up in the hands of who you want.

Download the Binding death benefit nomination form.

The information on this website is of a general nature only and does not take into account your personal objectives, situation or needs. You should consider obtaining professional financial, taxation and or legal advice tailored to your personal circumstances prior to making any financial decision.