The Master Painter Australia - April 2016 Vol. 1 | Page 48
THE MASTER PAINTER AUSTRALIA
048
Legal
Issues
The Importance of Nominating
your Beneficiaries
When you die, the Trustee of your super fund decides on
the dependants who receive your super. Many people are
blissfully unaware that their entire super, and often their
insurance benefits, are up for grabs amongst the dependants
they leave behind.
Under superannuation law, the Trustee of your super fund
has the discretion and obligation to use this power. At this
stage you might say to yourself, this does not apply to me, I
have nominated my beneficiaries. Are your bases covered?
On the positive side, this power allows the Trustee to take
into account a new spouse or family if the Superannuation
Member never got around to updating those nomination
forms. The downside is that this may mean that your “ex”,
who you never got around to removing as a nominated
beneficiary, may get their hands on your super after you have
gone and it is too late to argue.
Binding Nominations
Well now you can overrule their discretion and truly have
the final say about who receives your death benefit. Ensure
that your super is paid, as you want, after your death. This
feature is called Binding Death Benefit Nominations (Binding
Nominations).
What are the benefits of making a binding nomination?
You get to remove any uncertainty about who receives your
super (including insurance amounts) when you die. This
means you can nominate exactly who gets what. This makes
your Estate Planning more precise and effective.
Who can I nominate?
You can nominate any of your dependants as defined under
the superannuation law – i.e. your current spouse (including
your defacto) or your child of any age (including adopted
children), or a person financially dependant on you at the
time of your death (your mother-in-law who is living with you).
You can also nominate your estate (your assets in your Will).
Nominating your estate is the most tax effective method of
distributing your assets. You can split the benefit between
people as long as you give details of those dependants and
the proportional share you want to go to them. Only the
nominees who are dependent at the time of your death can
receive your super.
Must I make a binding nomination?
No. The decision is yours to make. You can make a binding
nomination at any time prior to your death.
What happens if I don’t make a binding nomination?
The Trustee distributes your benefits amongst your
dependants and your estate in whatever way it believes
is fair and reasonable. This is done taking into account
the nomination you completed on your application form
(remember, though, they are not bound by your nomination
unless you made a ‘Binding Nomination’).
What if I have already named my beneficiary?
Any nominations made before December 1999 are not
binding on the Trustee. The Trustee continues to take them
into account when exercising its discretion, provided you
do not make a ‘Binding Nomination’. However, if you make
a ‘Binding Nomination’ now, you override any prior death
benefit nomination you have made.
Are binding nominations effective forever?
No. Binding nominations are only valid for three years. Your
super fund advises you when your nomination is about to
expire. You can revoke or change your nomination at any
time by sending your super fund a new binding nomination,
which is witnessed by two independent individuals. It is
important to note that if your nomination expires and is not
renewed, your benefits are paid to your estate. Therefore,
once you have made a binding nomination your super is not,
in the future, payable at the discretion of the Trustee, even if
the binding nomination is no longer effective.
How do I make a binding nomination?
Contact your super fund and ask them whether they allow
you to make binding nominations. You will need to complete
a special form and have your signature witnessed in a special
way.
What happens if my nomination is invalid?
If your nomination is invalid for any reason, e.g. not signed
properly, your super is paid at the discretion of the Trustee, to
either your dependants or your estate.
Is there anything else I should consider?
You may want to consult an adviser and a lawyer to
determine any tax and legal implications and t