Published 13 Aug 2015
Superannuation funds are an important part of planning for your retirement. Employees pay money into their super throughout their career, which is then accessible once their working life comes to an end.
Unfortunately, some people pass away before reaching an age where they will benefit from the cash invested in their fund. The money is instead distributed to beneficiaries via death benefits, but the process by which this is carried out may depend on how much time you have spent on estate planning.
This article will explain what happens to your super should unforeseen circumstances strike. However, contact a superannuation claims lawyer if you require more information or have any questions.
A super fund trustee is in charge of distributing the money in your super, and they will follow specific guidelines based on what legal actions you took before your death.
One option is to establish a binding nomination, which is designed to eliminate any uncertainty as to who will receive superannuation death benefits. You can choose to leave the money to a dependent or a legal representative, and the trustee has limited control over the process.
A non-binding nomination provides guidance to the trustee, but they are not required to follow your instructions. Trustees can therefore ignore your nomination, particularly if you select a beneficiary who is not a dependent.
For death benefits, the term 'dependents' refers to the spouse, children or de-facto partners of the deceased. Individuals who were financially reliant on the person who has passed away and those who had an interdependency relationship are also included.
Trustees often defer to your will when there is no one who can be classed as a dependent. As such, writing a will is crucial if you would like to leave money to people outside of your immediate family.
You should be aware that if you've not committed to a binding or non-binding nomination and you have no dependents, the money is added to your estate. This means it may become entangled in an inheritance dispute.
No dependents and no will
Intestacy rules are likely to apply when there are no dependents and you haven't written a will before you die. The cash is then distributed via a formula.
If you have no spouse or children, the money will instead go to other members of your family. In descending order, the beneficiaries would be an individual's parents, followed by siblings, grandparents, aunts and uncles and, finally, cousins.