Have you ever wondered – what happens to my super when I die?
How your super is distributed can’t be covered in your will – unless you’ve made the necessary arrangements with your super fund beforehand.
Why can’t super be covered in my will?
Your super can not typically be covered by your will because your will only covers assets you own personally. This means things like, your house, car, investments, savings and personal items.
Superannuation is held in a trust by your super fund trustee. It is governed by superannuation law, which is why different rules apply.
It’s also why your super fund must be kept up to date with your instructions.
Who can I leave my super money to?
In the event of your death, your super fund must pay a death benefit to one or more people in your life who are eligible.
Eligible super beneficiaries might include:
- your spouse (including de facto and same sex partners), but not former spouses
- your children regardless of age
- anybody financially dependent on you when you die
- your estate or legal personal representative.
One reason you might nominate your estate or legal personal representative is you can then specify in your will
- how and to who you want to distribute your super money to,
- which can include eligible beneficiaries (mentioned above),
- as well as other people in your life.
It’s important you ensure the information in your will is up to date. This is to ensure your legal personal representative pays out your super money as per your instructions.
How do I nominate my beneficiaries?
Most super funds will give you several options when it comes to specifying your beneficiaries.
These options are important to understand. The type of nomination you choose could give you greater control over how your super benefits are distributed.
In a binding death benefit nomination that satisfies all legal requirements, the trustee of the super fund must pay your super to the beneficiaries you have nominated.
There are lapsing and non-lapsing binding nominations. Lapsing nominations typically expire every three years unless you renew them, while non-lapsing nominations may never expire.
If you make a non-binding nomination, the trustee of the fund will have the final say over which beneficiaries receive your super and in what proportions, but your nominations will be considered.
Depending on the product, if no nomination is made, the trustee will pay your death benefit to your estate. Or it will use its discretion to determine which eligible beneficiaries the money should go to.
Super in pension phase already?
If your super is already in pension phase, then all of the above plus additional options may be available and need to be considered.
Source: AMP, 29 April 2019