Passing on your super to your loved ones
11 July 2023
You are growing your superannuation throughout your working life to achieve a comfortable retirement. But what happens to your super in the event of your death?
Your super does not automatically form part of your estate, even if your wishes are included in your Will. However, you can arrange for your family and loved ones to receive your super after you have gone by nominating them as beneficiaries.
Nominating your beneficiaries gives you peace of mind, knowing that your super can help your family in the future.
Arranging who receives your super
In the event of your death, your beneficiaries will receive the amount of money in your super account plus any insurance benefit that is payable. This is called a superannuation death benefit.
You can arrange who will receive your superannuation death benefit by nominating your beneficiaries for your Brighter Super account. There are two ways to do this:
- Binding Death Benefit Nomination – this is a legal document which binds Brighter Super to pay your benefit to your nominated beneficiaries, provided it is still a valid nomination at the time of your death.
- Preferred Beneficiary Nomination – this is not legally binding, but it can help guide us when deciding who to pay your benefit to. The fund is not bound to pay your benefit to your nominated person(s), as we are legally required to identify all dependants and pay your benefit according to rules set out in our Trust Deed.
Both types are described below.
Binding Death Benefit Nomination
A Binding Death Benefit Nomination is a legal document that binds Brighter Super to pay your death benefit to whoever you have nominated – if they are eligible to receive your benefit at the time of your death (see further below).
Making a valid binding nomination puts you in control, and it can make it quicker and easier for your loved ones to receive their money after you’ve gone.
A Binding Death Benefit Nomination can be particularly useful if you have a complex family situation, such as an ex-partner or children of a current and former relationship.
There are two types of binding nomination:
- Lapsing – the nomination expires every three years, so you will need to re-submit your nomination on an ongoing basis. Your nomination must be witnessed by two people over the age of 18 years who are not your beneficiaries. Every year, we will notify you of the details of your binding nomination and its expiry date. We also send reminders when nominations are about to expire. Your nomination will also become invalid if any person nominated as your dependant dies or ceases to be your dependant.
- Non-lapsing – the nomination will not expire. However, changes in your circumstances may affect the validity of your nomination, such as a new de-facto relationship or marriage breakdown. We recommend that you regularly review your death benefit nominations.
Your annual statement or Member Online account will show whether you currently have a valid nomination in place.
To make a Binding Beneficiary Nomination, you will need to complete and submit our Binding Death Benefit Nomination Form (M10), available at brightersuper.com.au/forms. This form lets you choose either lapsing or non-lapsing nominations.
Preferred Beneficiary Nomination
A Preferred Beneficiary Nomination helps guide us when deciding who to pay your benefit to.
Unlike a Binding Death Benefit Nomination, Brighter Super is not legally required to follow your instructions. This is because we are obliged to identify all dependants and pay your benefit according to rules in our Trust Deed and Australian Government legislation.
Making a Preferred Beneficiary Nomination is simple, does not require renewal unless your circumstances change and may suit you if you have a straightforward family situation.
A Preferred Beneficiary Nomination can only be made online, by logging into your account in Member Online.
Valid beneficiaries
Brighter Super can only pay a death benefit to a valid beneficiary (as required by law), which can be one or more of the following:
- Your dependants, which are defined as:
- a spouse – married or de facto.
- any child – including stepchildren, adopted children, ex-nuptial children, or anyone who fits the definition of a child under the Family Law Act 1975.
- any person in an interdependent relationship with you – defined as someone you have a close personal relationship with, you live together, and one or each of you provides the other with financial and domestic support and personal care.
- any person who was wholly or partially financially dependent on you at the time of your death.
- Your legal personal representative, which for example, is an executor of your Will or administrator of your estate.
This can help if you want to leave your super to someone who is not a dependant, and you can outline who you would like it distributed to in your Will.
In this instance, the death benefit is paid directly to your estate. It is then distributed by your legal personal representative according to your Will.
Full details about the eligibility of dependants and interdependent relationships are available in our death benefit info sheet.
No beneficiaries nominated or your nomination becomes invalid
If you die without nominating a beneficiary or your beneficiary nomination is invalid, Brighter Super will pay your death benefit in line with the rules set out in our Trust Deed and superannuation legislation.
This means we are required by law to determine how to distribute your money. Brighter Super will generally pay your benefit to your dependant/s or legal personal representative. If there are no dependants and no legal personal representative, we must pay your benefit to any other person/s as permitted by law.
If you have a complex family situation, the outcome could be different to what you had in mind.
Changing or cancelling your nomination
Your circumstances may change, and you may need to update your beneficiaries. For example, you may have a new son or daughter, or one of your beneficiaries is no longer a dependant.
You can change or cancel your nomination at any time. You can do this on the same form, the Binding Death Benefit Nomination Form (M10), available at brightersuper.com.au/forms. We do not charge a fee when you make or change a Death Benefit Nomination.
Tax implications
Death benefits paid as a lump sum are tax-free if paid to an eligible dependant as defined by the Australian Taxation Office.
If a death benefit is paid to someone not considered a tax dependant, including an adult child who is not financially dependent on you, the benefit’s taxable portion is taxed at 17% (including Medicare levy). The untaxed component is taxed at 32% (including Medicare levy). The taxed and untaxed components are calculated at the time of payment.
Further information on taxation is on our death benefit info sheet.
Further information
We recommend you seek professional advice before making any arrangements regarding the treatment of your estate. There may also be social security or tax implications for your potential beneficiaries.
Brighter Super’s team of superannuation specialists and financial advisers are here to help you. If you have any questions about beneficiary nominations, please contact us on 1800 444 396.
LGIAsuper Trustee (ABN 94 085 088 484) (AFSL 230511) (the Trustee) as trustee for LGIAsuper (ABN 23 053 121 564) (RSE R1000160) (the Fund) trading as Brighter Super. Brighter Super products are issued by the Trustee on behalf of the Fund. Brighter Super may refer to the Trustee or LGIAsuper as the context may be.
This article provides general information only and does not take into account your individual objectives, financial situation or needs. As such, you should consider whether it is appropriate in light of your own objectives, financial situation and needs prior to making any decision. You should consult a licensed financial advisor if you require advice which does take into account your personal financial circumstances. You should also obtain and consider the Product Disclosure Statement (PDS) before making any decision to acquire any products. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the PDSs and TMDs at brightersuper.com.au/governance. This article contains information that is up to date at the time of publishing. Some of the information may change following its release. Any questions can be referred to Brighter Super by calling us on 1800 444 396 or by emailing us at info@brightersuper.com.au.
