Who Inherits your Superannuation Money?

Who inherits your superannuation in the event of your passing?

Knowing who inherits your superannuation money is important. Ensuring that your hard-earned superannuation savings end up in the right hands if you pass away can be a confusing process. As mentioned by this ABC article, the ‘legal beneficiary’ is the person in your life who will receive this money in the instance of your death, which is in line with industry guidelines. The below will step you through common superfund questions around how to ensure you have control over your super – now, and after you’re gone

Who Inherits your Superannuation Money
Who Inherits your Superannuation Money (Pexels)

What is Superannuation?

The Australian Tax Office refers to superannuation as “a long-term investment which grows over time”. In Australia, as you work and are paid by an employer, a percentage of this money is put aside and placed in the hands of your/ your employer’s nominated superfund. The superfund then invests and manages this money for you until you retire. For more information about superannuation and why this is necessary, visit the ATO.

Who Inherits your Superannuation?

When joining a superannuation fund, they will provide you with a form which asks you to nominate who you wish to receive your money in the event of your untimely passing. Many people also choose to nominate this person (beneficiary) in their will, which can be drawn up by their lawyer. These options seem like the straightforward correct process, however many people are unaware that your nominated person still may not receive your hard-earned superannuation savings. Kathy Wilson, a lawyer in Wills and Estates who was interviewed by the ABC, explains that neither of these methods guarantee the nominated person. This is due to legislation governed by the superfunds, which allow them to choose which beneficiary receives your money.

Current superannuation beneficiaries include:

  • Your spouse or de facto, but not former spouses
  • Your children
  • Someone financially dependent on you at the time of your death
  • Your estate, but this requires legal help to override the beneficiaries listed above

Therefore, if the person who you wish to receive your money isn’t included in this list, they may not be an eligible beneficiary.

It is also important to note that the law has specific criteria on what also qualifies as a legal de-facto relationship, including not only time spent living together, but shared finances, property and expenses.

There are three key ways to nominate a beneficiary

According to the ABC, the three ways are:

  • Through a binding nomination drawn up by a lawyer which names your legal beneficiary, which can then be distributed to another beneficiary such as a charity. These documents expire after a given time period, so ensure this is checked and discussed with a lawyer.
  • A non-binding nomination, which is taken into consideration by the trustee, however is not guaranteed.
  • No nomination, similar to the above, which means the trustee will direct the money to either your estate or a suitable beneficiary according to the above.

To ensure your hard earned superfund savings end up in the right hands it is best to speak with a superannuation expert, such as a lawyer or financial planner. They can help ensure that not only do your beneficiaries receive your superfund savings, but also the death insurance in your superfund as well.

To read the original article visit: https://www.abc.net.au/news/2021-06-20/who-gets-superannuation-when-die/100226612

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