Death and money are tough topics to think about. It’s why many of us haven’t planned for who will receive our superannuation when we die.<\/p>\n
“So many people don’t want to think about their own mortality,” says estate planning lawyer Melisa Sloan, based in Melbourne\/Naarm.<\/p>\n
There are also a lot of misconceptions around nominating a beneficiary for our superannuation, explains Ms Sloan.<\/p>\n
And for single people without kids, there is an added layer of complexity.<\/p>\n
New research shows at least 6.5 million Australians will not have a say<\/a> in who inherits their superannuation because of the way super members are prompted to inform funds of who they wish to receive their savings after their death.<\/p>\n While this news has highlighted the importance of understanding the difference between making a “non-binding” or “binding” nomination<\/a>, knowing who you can leave your super to \u2014 and how \u2014 is also critical.<\/p>\n For people who are not married or in a de facto relationship, and don’t have children, choosing someone such as a parent or sibling isn’t straightforward, as they most often don’t meet the criteria for a binding nomination.<\/p>\n “Being empowered with the knowledge of who you can leave super to, and the tax implications, can make a significant financial difference of how super will be paid to beneficiaries,” says Ms Sloan.<\/p>\n What is a super beneficiary and who can you nominate?<\/p>\n A superannuation beneficiary nomination is a formal way to tell your super fund who you want to receive your super death benefit when you die.<\/p>\n Why it’s time to review your will<\/a><\/p>\n We should be reviewing our wills and estate plans every two to three years, estates lawyer Gillian Hunter says<\/p>\n Natasha Janssens, a financial educator and behavioural money coach, says many people mistakenly believe you can nominate anyone to inherit your super.<\/p>\n But a beneficiary can be a spouse, children, someone who is in an interdependency relationship<\/a> with you, someone who is financially dependent on you, or your estate or legal representative.<\/p>\n You have the option of making a “non-binding” nomination \u2014 a quick process that can often be completed online \u2014 or a “binding” nomination, which is a more complex process.<\/p>\n Ms Janssens says a binding nomination must be followed by the trustee of your super fund, providing it’s a valid nomination (properly signed and naming a valid beneficiary).<\/p>\n “A non-binding nomination does not have to be followed \u2014 it is merely a statement of your preferences, but the ultimate decision resides with the trustee of your super fund.”<\/p>\n More than a third of Australians surveyed by Super Consumers Australia had no death benefit nomination registered with their super fund \u2014 and a further 25 per cent did not know if their nomination was binding.<\/p>\n Ms Sloan says another common assumption is that super forms part of a will, but super is not an asset of someone’s estate.<\/p>\n “It’s alarming the amount of people who don’t know that.”Your options when you have no spouse or dependants<\/p>\n If you want to leave super to someone such as a parent, friend, or sibling, you’ll need to complete a beneficiary nomination and appoint your legal personal representative, Ms Janssens explains.\u00a0<\/p>\n “The situation may be different for an 18-year-old living at home who may have an interdependency relationship with her parents, and so could nominate her parents as beneficiaries for super.<\/p>\n “On the other hand, a woman living independently wouldn’t be able to nominate her parents and as such would have to nominate her estate if she wished for her parents or a sibling or friend to receive the super.”<\/p>\n Who can inherit your superannuation?<\/a><\/p>\n Consumers are being urged to make ‘binding’ death benefit nominations to avoid lengthy legal disputes between family members and loved ones.<\/p>\n Ms Sloan says when someone nominates a legal personal representative (executor of their estate), the money will be paid to them and they can distribute the money in accordance with the will.<\/p>\n You will need to have a will in place to achieve this.<\/p>\n “It’s a roundabout way to get it to them,” Ms Sloan says.<\/p>\n Our experts say people without a spouse or dependents should seek legal advice before making a nomination and deciding whether it’s best to make a binding nomination for a specific person or handle it through the estate.<\/p>\n “There are numerous considerations to be made here including tax implications<\/a> as well as risks of challenges to the estate should your super be handled in that manner,” Ms Janssens says.<\/p>\n Revisit to reflect changes to your relationship status\u00a0<\/p>\n Ms Janssens says people should make sure nominations are up to date when their relationship status changes.<\/p>\n