Wills and Estates: 23 March 2019
Australia now has around $1.3 trillion dollars invested in superannuation, and the total keeps growing. According to statistics produced by the superannuation regulator Australian Prudential Regulation Authority over the 12 month period ending December 2010 there was an increase in superannuation assets of 7.7%.
With the continuing increase in superannuation investments, assisted by generous tax concessions and contribution incentives, it is not surprising that superannuation is becoming, for many people, one of their largest assets. But what happens to those superannuation benefits when you die?
Clients are often surprised to find out that their superannuation does not automatically form a part of their estate. Superannuation legislation requires superannuation benefits to be paid to either a "dependantor to your legal personal representative, such the administrator or executor of your estate (LPR) to distribute in accordance with your Will. The trustee of your superannuation fund then to decides whether your estate will receive your superannuation entitlements or whether they will be paid directly to your dependant(s). The trustee also has the discretion to determine which of your dependant(s) will receive your superannuation entitlement and in what proportion.
Many superannuation funds now allow members to make a Binding Death Nomination which must be adhered to by the superannuation trustee as long as it is validly executed and nominates a superannuation dependant or LPR to receive the benefit. By making a Binding Death Nomination the member knows where their superannuation benefit will be going when they die and they can then organise their other assets accordingly. If the member knows that the superannuation benefit will be paid into your estate they can ensure the benefit is dealt with in their Will. Likewise, if the member knows that the benefit will not be paid to the estate but rather will be paid directly to their dependants then the Will can be tailored to ensure their other assets are distributed in a way that the Will maker so desires.
The tax treatment of superannuation death benefits can vary depending on who receives the benefit. Accordingly, an effective estate plan should include consideration of who to leave superannuation death benefits to and who to leave other the assets to.
The lawyers and accountants at Aitken Partners can help ensure your superannuation fund and other assets are transferred to the beneficiaries of your choosing.