Most people are familiar with the idea of leaving the house, the boat or the stamp collection to someone in (or sometimes outside of) their family, through their Will. But what about superannuation? What happens when you die and how can you make sure that people aren’t unreasonably inconvenienced or disappointed at a difficult time?
The assets that you own form your estate and are distributed according to your Will. You can choose to give assets to anyone. If you don’t have a valid Will, your assets are distributed according to legislation. Your assets are property you own personally like bank accounts, shares, managed funds, real estate and lifestyle assets (such as cars and boats). Assets held by companies or in trusts do not form part of your estate.
Although superannuation is held in your name it is not yours – the super fund trustees hold it in trust for your benefit. If you die, superannuation legislation requires them to pay the money to your dependents. This means to your spouse, your children, someone who is financially dependent on you or someone living in a interdependent relationship with you.
The aim of the legislation is to enable the trustees to pay up the super quickly on the production of a death certificate. In most cases, this is quicker than finalising your estate. Sadly, in some cases, family disputes mean that even a superannuation payment is delayed.
What can you do?
As life changes, your estate plan should be updated to reflect those changes. Many events can trigger a need to review your arrangements, such as:
- Marriage or entering a de-facto relationship
- Changes in the family such as births and deaths
- Adult children entering or leaving marriages or de-facto arrangements
- Death of a person who plays a key part in the estate plan, such as the executor.
It is important to know that the super fund trustees should consider the intentions of your Will in making a decision, so make sure you have one and that it is up-to-date. You should also be able to instruct the trustee directly of what you want to happened, under a ‘binding nomination’ or similar facility within the super fund.
It is also worth telling your beneficiaries what you intend, as this will give them the chance to prepare for the outcome rather than be surprised.
If you wish to learn more in relation to this important area of your financial plan, or you require assistance with your estate planning needs, please contact us on 08 9322 7029 to arrange a time to meet with one of our advisers.