As uncomfortable as it can be to think about, no one lives forever. And because you've worked hard to earn your super money, you'll want to make sure that when the time comes, your remaining super goes to your loved ones.

Like many people, you may not know that your super money isn’t covered in your will. Or how to make sure your money goes to the people you choose.

Why won’t my will cover my super?

Your super is not covered by your will because your will only covers assets you own. Technically your super money is held for you in a trust.

Who can I leave my super money to?

In the event of death, your super fund must pay a death benefit in the form of money, to someone in your life who is eligible to receive this money, known as a super beneficiary.

People who are eligible to be super beneficiaries are:

·  Your spouse or partner 

·  Your children

·  Anybody financially dependent on you when you die

If you want to leave your money to someone who is not eligible to be a super beneficiary, you’ll need to make a binding nomination that your estate (or legal personal representative) is the beneficiary. Then you’ll need to ensure your will is up-to-date so the money can be distributed. 

Nominating who your super goes to 

Without a valid Beneficiary Nomination, the decision is left to your super fund Trustee. So for certainty and peace of mind, it makes sense to complete a Beneficiary Nomination.

When it comes to specifying your beneficiaries, most super funds will give you a number of options. These are explained in the table below.

Option	What this means
Binding nomination (lapsing or non-lapsing)	The Trustee will assess your binding nomination to determine if it’s valid. Lapsing binding nominations expire every three years and non-lapsing never expire.
Non-binding (preferred) nomination	The Trustee will decide which of your beneficiaries will receive your death benefit and in what proportion. Your nominated beneficiaries will be taken into account.
Reversionary beneficiary nomination	A reversionary beneficiary is the person who will receive your super as an income stream if you die. Only spouses, certain children and dependants are eligible and only some AMP super products have this option, so give us a call on 131 267 to find out more.
No nomination	Depending on the product, the trustee will either pay your death benefit to your estate or it may use its discretion to determine the beneficiaries.

Many funds will let you know when a lapsing binding nomination is about to expire, but you need to make sure your details are up-to-date.

Some funds also allow you to change to a non-lapsing binding nomination. This would mean having less personal administration to worry about—you nominate your beneficiaries once and don’t have to worry about it again unless you want to change it. It also gives you the peace of mind that you won’t get caught out if you don’t receive the lapsing reminder notice and something happens to you.

Will the money be taxed?

It will depend on whether the beneficiary receiving the super is a tax dependant or not.

A tax dependant includes your spouse, ex-spouse, children under the age of 18 or any other financial dependants. Lump sum super benefits paid upon your death to tax dependants will be tax free.

For a non-tax dependant beneficiary, the tax payable on the taxable component of the lump sum super benefits described in the table below. 

Type of super	Effective tax rate
Taxable component: taxed element This is the part of the death benefit that relates to pre-tax contributions plus all fund earnings, which have been subject to tax in the fund.	Maximum tax rate or 15% plus the Medicare levy
Taxable component: untaxed element This is untaxed because it has not been in the super environment until after the member dies. In other words, it is the part of the death benefit that has not accumulated in super.	Maximum tax rate or 30% plus the Medicare levy

 What to do now

To ensure you have binding nomination arrangements in place for your super money:

1.    Check that your super fund allows binding nominations and find out what nominations you have in place.

2.    Make sure your chosen beneficiaries are eligible super beneficiaries and your will is up-to-date.

3.    Complete and sign a binding nomination form—in the presence of two witnesses who are not beneficiaries—then send the form to your fund.

When you’re considering who you’re going to leave your super to, think about the people that matter to you most and how tax implications may affect the amount they receive. If you need some help, why not contact us for advice and assistance to put your plans in place. 

Published : 28 Apr 2016