What Happens to Your Superannuation When You Die?

Do you know what happens to your superannuation when you die? Superannuation, or “super,” is often one of the most significant assets you’ll accumulate over your lifetime and is an integral part of your retirement and estate planning. 

Understanding how it is handled after you pass is essential to ensuring that your loved ones are cared for in the way you intend.

Superannuation in Estate Planning

Unlike directly held property or bank accounts, superannuation does not automatically form part of your estate upon passing. Instead, it’s controlled by the trustees of your super fund, who are responsible for managing and investing your superannuation. They have the discretion to distribute your super according to the fund’s rules and the law. This distinction makes understanding the specific directives regarding your super all the more critical.

Nominating Beneficiaries

One of the most straightforward ways to influence who receives your super after you die is by making a beneficiary nomination. You can choose from several types of nominations, including:

1. Binding Nomination: This directs the trustee to pay your super to the person or people you have nominated, provided the nomination is valid at your death. It must be renewed typically every three years. If your nomination is invalid at your death, your superannuation may be distributed according to the fund’s rules or the law, which may not align with your wishes. 
2. Non-binding Nomination: This nomination guides the trustee about who you would prefer your super to go to. It is not binding, which means the trustee may consider your wishes but is not obliged to follow them. 
3. No Nomination: If you don’t nominate anyone, the super fund’s trustee will decide who among your dependents or your estate will receive your super. A dependent, in the context of superannuation, is typically a spouse, child, or someone who is financially dependent on you at the time of your death.

The Role of a Binding Death Benefit Nomination

A Binding Death Benefit Nomination (BDBN) ensures that your superannuation is distributed according to your wishes. Knowing that your super will benefit your chosen beneficiaries without dispute or delay can provide peace of mind. However, keeping this nomination current is essential to reflect changes in your circumstances, such as marriage, divorce, or children’s birth. These life events can significantly impact your estate planning and may require you to reconsider your superannuation arrangements.

Impact on Estate Planning

Since super is not automatically part of your estate, it’s crucial to consider it separately when you make your will. Coordination between your will and your superannuation nominations is vital to avoiding unintended outcomes or conflicts among your beneficiaries. 

For instance, if your will directs your estate to one person but your superannuation nomination names someone else, these assets will go to different individuals independently. This could lead to disputes among your loved ones or your assets being distributed in a way that does not align with your intentions.

Seeking Professional Advice

At Bayside Wills and Estates, we specialise in wills and estate planning, including the complex details of superannuation. Our experienced team in Melbourne’s Bayside ensures that your estate plan is comprehensive and reflects your superannuation arrangements and will. 

We provide personalised advice and solutions tailored to your unique circumstances, ensuring you make informed decisions about your superannuation and estate planning.

For more information, call 03 9592 3356 or schedule a free consultation. Your peace of mind is our priority, and we are here to ensure that every aspect of your estate planning is handled with expertise and care.