We all work hard to build a healthy super balance. So, it makes sense that you’d want to understand the ins and outs of how super beneficiaries work so you can make sure your super money ends up in the right hands if you die.
What is a beneficiary?
Put simply, a super beneficiary is someone you name to receive your death benefit. What many people don’t know is that super is not generally covered by wills, unless you make the necessary arrangements with your super fund beforehand. So, to make sure your super money goes to who you want, it’s important to keep your super beneficiary details up to date.
Who gets my super if something happens to me?
Deciding who gets your super when you die isn’t as simple as having a Will. That’s because Wills only cover assets you own, such as houses, cars, investments, jewellery and other personal items. Super on the other hand, is held in trust for you by the trustee of the super fund.
To make sure that your super, and any life insurance you hold inside super, goes to the people you’d like it to when you die, you need to nominate beneficiaries. If you don’t nominate a beneficiary, your super fund may choose who gets the payment, regardless of what you have in your Will. Making a super beneficiary nomination will help to give you peace of mind.
Who can be my beneficiary?
A beneficiary is anyone who gets the pay out from your super fund when you die. You can nominate one or more beneficiaries, if your super fund allows it.
What often surprises people is that you can’t name just anyone as a beneficiary in your super. Eligible beneficiaries (also referred to as dependants) can be:
- your spouse, this includes de-facto and same sex relationships,
- your children, including natural, step or adopted, or
- anyone financially dependent on you when you die.
If a person doesn’t meet the above criteria, you may still be able to nominate them as an eligible beneficiary if they are an interdependent. An interdependent is where you’re in an interdependency relationship with them when you die. To be an interdependent relationship, all the following criteria need to be met:
- you have a close personal relationship, that’s not necessarily family,
- you live with the person,
- one or both of you give financial support, and
- one or both give the other domestic support and personal care.
An interdependency relationship also includes two persons (whether or not related by family):
- who have a close personal relationship, and
- who don’t meet the other three criteria listed in the paragraph above because either or both suffer from a physical, intellectual or psychiatric disability
A financial dependant is a person wholly or partially dependent on you for necessary financial support. This can include money, or other support such as food, clothing, transport, education or accommodation costs. It doesn’t include loans or one-off gifts from you. People like your parents, siblings, or even a charity are not automatically viewed as a financial dependant.
Your estate, or legal personal representative, can also be a beneficiary. A legal personal representative is the person appointed by a court to manage the estate, usually, an executor (if you left a will) or administrator (if there was no will) of your estate. If you nominate your estate or legal personal representative, you can then specify in your will how to distribute your super money. It’s important that your will is up to date, so your legal personal representative pays out your super money how you want.
Please note, superfunds check to see if your nominated beneficiary is a dependant or legal personal representative at the time of the person’s death – not at the time they receive the nomination.
What are the benefits of nominating a beneficiary?
The benefits of nominating a beneficiary include:
- You get to decide who you’d like your super to go to when you die,
- Your superfund will pay in accordance with your nomination if it is valid, and
- It makes the process easier for your beneficiaries when they go to make a death claim.
How to nominate a beneficiary
To have certainty around who’ll get your super when you die, you can make a non-lapsing nomination for super account.
A non-lapsing nomination doesn’t expire and continues to apply until you choose to update or cancel it. However, your nomination becomes invalid if certain life events happen, like you get married, divorced or the nominated beneficiary dies or is no longer a dependant. It’s important to review your non-lapsing nomination regularly to make sure it reflects your current circumstances.
As everyone’s situation is different, it’s important to always consult your financial adviser before making any changes to your superannuation.
