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Transferring your superannuation on death

Did you know that your superannuation will not automatically form part of your estate when you die and therefore may not be governed by the terms of your Will?

With Australians having more than AUD1.62 trillion in superannuation, it is imperative to consider your superannuation as part of your estate planning.

Many people elect to make a superannuation binding death benefit nomination (‘BDBN‘) directing the trustee of their superannuation fund to pay their superannuation in accordance with their nomination. In most cases a valid BDBN will ensure that your hard earned superannuation passes to your chosen beneficiaries in accordance with your wishes. If you don’t make a BDBN, then the trustee of your superannuation fund will often have discretion as to who to pay your superannuation death benefit to when you die and this may not be consistent with your wishes.

A BDBN must comply with relevant superannuation legislation and regulations as well as the rules governing the particular superannuation fund. It is important to read the fund rules carefully (eg. most fund rules state that a BDBN will lapse after 3 years).

In some cases it may be preferable to nominate your ‘legal personal representative’ on a BDBN and to have your superannuation form part of your estate when you die and be dealt with under the terms of your Will (this can be particularly beneficial if paid into a superannuation proceeds trust). This requires careful drafting in your Will to avoid negative tax implications.

With superannuation often being a person’s largest or second largest asset, it is important to seek professional advice.

(IMPORTANT NOTE: This post is intended as a source of general information only. It does not constitute legal advice. All legal advice needs to be tailored to your individual circumstances.)

Powers of attorney and superannuation

Can an attorney appointed under an enduring power of attorney make, revoke, alter or confirm a superannuation death benefit nomination? The answer is unclear.

Some lawyers are of the view that an attorney has the power to confirm (ie. renew) a nomination which has lapsed, but does not have authority to make, revoke or alter an existing nomination. The rules governing some superannuation funds do not permit nominations made by an attorney altogether.

Given the uncertainty of the law in this area, McIntyre Legal Pty Ltd generally recommends clarifying the position by expressly stating in the instrument appointing the attorney (ie. in the Enduring Power of Attorney itself) whether the attorney has authority to provide instructions in respect of superannuation (including making, revoking, altering, or confirming a death benefit nomination).

Please contact us if you would like advice and assistance in drafting an Enduring Power of Attorney.

(IMPORTANT NOTE: This post is intended as a source of general information only. It does not constitute legal advice. All legal advice needs to be tailored to your individual circumstances.)