Understanding who receives your super in the event of your death is important. It’s not the same as having a Will. A Will includes assets such as personal belongings, property and non-super investments.
As your super is held in a trust by the Trustee of the super fund, it’s not considered as an estate asset. This means you can choose who receives your super without needing a Will.
Why is it important to nominate a beneficiary?
Super is your money! If you don’t make a nomination, the Trustee will decide who to pay your super to after your death. This means you don’t have any preference to who it is given to. If you want control over who receives your super, it’s a good idea to put in a nomination.
Types of beneficiary nominations
There are two types of beneficiary nominations;
- Non-binding beneficiary nomination
This nomination is who you would prefer to receive your super benefit. The Trustee will take your nomination into account, but they are not legally bound to follow it. - Non-lapsing binding beneficiary nomination
This nomination gives you greater certainty on who will receive your super benefit. The Trustee must pay your super to the person(s) you have nominated if you have a valid non-lapsing binding nomination in place.
Who can receive your super?
You choose the beneficiaries - these are the people who will receive your super benefit in the event of your death.
You can’t nominate just anyone, there are five categories of people you can nominate:
- Legal Personal Representative (LPR)
This is the executor named in your Will or the administrator of your estate. If you nominate a LPR to receive your super benefit, then your LPR will distribute the super benefit according to your Will. - Spouse
This person is who is legally married to you or a person whom you are in a genuine de facto relationship with, regardless of gender. - Children
Your children or your spouse’s children, adopted, step or ex-nuptial children or any age can be nominated. The definition of children is defined under the Family Law Act 1975. - Financial dependent
Financial dependency means that at the time of death, the person relied on you to meet or assist in meeting daily living expenses such as utility, household expenses, rent and shared financial commitments such as mortgage repayments. - Interdependency relationship
This relationship exists when at the time of your death, you and another person satisfy all of the following circumstances; close personal relationship, lived together, provided financial, domestic support and personal care to the other. Alternatively, it can also exist if two people have a close personal relationship, but the other requirements aren’t satisfied because either or both persons suffer from a disability.
The person(s) you nominate must fall into one of these categories for your nomination to be valid. If you nominate someone who does not fit into one of the categories above, then your nomination may be invalid and the Trustee will use their discretion to decide where your super is paid in the event of your death,
Can you have more than one beneficiary?
Yes. You can nominate your Legal Personal Representative (LPR) if you have a Will and they will allocate your super benefit according to your Will. Or you can allocate the percentage per beneficiary when you complete the form. Remember - your nomination needs to add up to 100% for a nomination to be valid.
Does the beneficiary pay tax on the money they receive?
This depends on the relationship of the beneficiary to you.
- If the beneficiary is considered as a financial dependent, they could qualify as a dependent for tax purposes and could receive the super benefit tax free.
- If the beneficiary is not considered to be a financial dependent for tax purposes, such as a financially independent adult child, they may need to pay tax on the super benefit.
What can I do now?
1. Consider who you would like nominate as a beneficiary
Make sure your nominated beneficiaries meet the eligibility requirements. This means they need to satisfy one of the five groups mentioned above. The total of the super benefit also needs to total to 100% to be valid.
2. Complete a Beneficiary Nomination Form
For non-binding nominations, you can email the completed form to hello@studentsuper.com.au. For non-lapsing binding nominations, you will need two witnesses to sign the form and it will need to be mailed.
3. Consider telling your beneficiaries you’ve nominated them
The super fund can’t action any payment until your beneficiary comes forward with a certified death certificate. You may choose to tell your nominated beneficiary so they are aware of what to do in the event of your death.
Updating beneficiaries
Both types of beneficiary nominations are non-lapsing, which means they don’t expire. It is important that if your circumstances change, you review your beneficiary nominations. You can update your beneficiary nominations at any time.
