Understanding How Superannuation and Wills Interact

Understanding how superannuation and wills interact is crucial when planning the distribution of your estate and superannuation for your loved ones.

In most cases, when a person passes away, their superannuation member account benefits will be paid to their beneficiaries as per the superannuation fund’s rules. However, the way in which superannuation member account benefits interact with wills and estates can depend on a few factors.

One important factor to consider is whether you have a binding death benefit nomination (BDBN) in place with your superannuation fund (private or self-managed superannuation funds).

Binding death benefit nominations allow a person to nominate who they would like to receive their superannuation member account benefits in the event of their death. If a person has a valid binding nomination, then the superannuation benefits will generally be paid to the nominated beneficiary or beneficiaries by the superannuation fund, regardless of what is specified in that person’s Will.

If a person does not have a valid binding nomination then the superannuation member account benefits may be paid to the ‘legal personal representative’ of the deceased’s estate (being the executor and trustee of the Will, or the administrator in the event there is no Will). In that case, the superannuation benefits will be released by the superannuation fund to the estate so they can be distributed according to the deceased’s Will, or according to the intestacy laws if the deceased person did not leave a valid Will.

It is important to note that there are some restrictions on who can be nominated in a binding death benefit nomination as a beneficiary to a superannuation member’s account benefits. For example, a person may not be able to nominate a non-dependant as a beneficiary.

Additionally, there are differing tax implications associated with the distribution of superannuation death benefits, depending on the circumstances.

In summary, the interplay between superannuation and a person’s estate and Will vary and so it is important to consider these factors when making plans for the distribution of your estate and superannuation so as to ensure that they interact with one another as you intend.

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All information on this site is general information only, and does not constitute specific legal advice. Please consult one of our experienced legal team for specific advice relevant to your situation.