Nominating a Beneficiary for Your Super Funds

The only way you can be certain that the person or organisation you want to become the beneficiary of your superannuation should you die, does actually finish up receiving the proceeds, is to formally name him or her as the beneficiary. If you fail to take this step the fund trustee could, within the law, hand over the proceeds to quite a different person or entity. The laws governing superannuation do place certain restrictions on who can and who can not receive the proceeds of your superannuation should the you die before reaching retirement age, a sum of money that is normally paid into your estate or to a dependant.

Who can be a dependent?

A 'dependant' for superannuation purposes can be any of the following:

• A person with whom you have a interdependent relationship.
• A person dependant on you financially.
• A child or children.
• A spouse.

A spouse is regarded as being a person you have legally married, a de facto partner, as long as the partnership has been formerly registered in an Australian state or territory, or any other person you are not legally married to, but who genuinely lives with you in a relationship as a couple.

Nominating your preferred beneficiary

Before nominating someone as your beneficiary it will pay you to check out the requirements of your particular superannuation fund so that you are familiar with any specific rules it may have regarding who you can, or can not, successfully nominate. If the beneficiary you nominate is not eligible for any reason, the trustee is not obliged to pay out your fund benefits to that person. The following situations may give you some indication of where you stand regarding nominating someone to receive your superannuation benefits on your death:

• A nomination that does not have to be reconfirmed every three years is known as a non-lapsing nomination. In this case your death benefit will be paid as you wish as long as the nominated person is still your dependant, or your legal personal representative who will be the executor or administrator of your estate; you have never revoked the person as being your nominated beneficiary; the nomination is still valid. Once you have nominated a beneficiary the trustee has to give you conditional consent unless he or she feels (a) you didn't appreciate the consequences of your actions; (b) the trustee became aware that you had since married another person; (c) you had entered into another de facto relationship; (d) you had a child or children with someone other than your partner or spouse or (e) you had become separated from your spouse permanently.

• A nomination for which your fund trustee has no choice but to honour your wishes is known as a binding nomination. To be valid it must comply with the following requirements; be renewed every three years; be dated and signed by two witnesses who are not involved as beneficiaries themselves; be completed on an approved document; the nominated person or persons must be your superannuation dependants or your legal personal representative.

• If the fund trustee agrees to consider your nomination it is a non-binding nomination. This means he or she is not bound to ensure the proceeds of your fund will necessarily be paid to the person of your choice. The trustee, in this case, retains a discretion on how he or she will deal with the situation when, or if, it ever arises. If you were to die, the money could be split among your legal personal representative and dependants in whatever proportion the trustee chooses.

• When you choose to leave things as they are there will be no-nomination. In this case the fund trustee will use his or her full discretion on how the money should be distributed. Whatever decision is made it will comply with the superannuation fund rules which usually means it will be paid to your legal personal representative who is the administrator or executor of your estate.

What if I have no dependents?

In the case where you have no dependants as are defined under superannuation rules you can arrange a brother, sister or even a charity to receive your superannuation proceeds should you happen to die. You can do this by nominating your estate as your preferred beneficiary. By doing this you can determine where the money finishes up by making the necessary provisions in your will.

Whatever you do it will remain important that you review your preferred nominations on a regular basis. This means you reviewing full details of all beneficiaries including their relationship to you along with their address and full names. All these types of details change over time and you should keep your superannuation trustee aware of any changes in this area. By doing this you will make the work of distributing your money by the trustee much easier.

Because it can become rather complex, and it being something you want to get right, you should always seek professional advice when it comes to settling matters concerning your superannuation death proceeds, your will and your individual personal circumstances.