An Achievable New Year’s Resolution: Review Superannuation Death Notice Nominations
by Macrossan & Amiet
January 29, 2016
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New year resolutions are often difficult to maintain and according to research are unachievable because the goal is too vague or having unrealistic expectations.
Perhaps this year an achievable resolution might simply be to review your death benefit nomination with your industry superfund or your self-managed super fund.
THE LAW
Under the Superannuation Industry (Supervision) Act 1993 (Cth) (Superannuation Act), a member can direct the trustee of its superannuation fund as to who shall receive the benefits payable on the member’s death.
TYPES OF NOTICE
There are three types of notices that a member can give the trustee:
- Option 1 – No notice
If you do not make a notice, the trustee is bound to deal with your benefit in your best interests. The trustee will normally make enquiries as to your family situation, who your dependants are, the provisions of your Will and other relevant circumstances before making a decision.
- Option 2 – Non-binding notice
A non-binding notice is used as a guide by the trustee before it reaches its own decision. That is, the trustee is not bound by a non-binding notice and has an absolute discretion as to where your death benefit will be paid. Where a non-binding notice is made, any decision by the trustee as to how to distribute the benefit can be challenged.
- Option 3 – Binding notice
If the requirements in relation to making a binding notice set out below are satisfied, then the trustee is obliged to distribute your death benefits in accordance with such notice.
REQUIREMENTS FOR A VALID BINDING NOTICE
- Persons nominated must be “dependant” or legal personal representative
The persons you nominate in your binding death benefit notice must be either your “dependants” or your legal personal representatives.
“Dependant” is defined under the Superannuation Act as including a spouse, any child of the member (regardless of age), and any person who is financially dependant on you.
If a person you nominate is not a dependant, the trustee cannot pay the benefit to that person.
If you are in any doubt as to whether the people you nominate are “dependants” under the Superannuation Act you should seek professional advice.
- The benefit must be ascertainable
The proportion of the benefit to be paid to each dependant must be certain or readily ascertainable from the notice.
For example, if your benefit is to be paid to your spouse and your two children then the percentage each person is to be obtain must be specified (e.g. 50% to spouse, 25% to first child and 25% to second child).
- Form of notice
A binding notice must:
- be in writing;
- be signed by you in the presence of two witnesses who are at least 18 years old and not mentioned in the notice; and
- contain a declaration signed and dated by each witness, stating that the witness was present when the notice was signed.
Any notice you give confirming, amending or revoking an earlier notice must also comply with these requirements.
WHEN IS THE NOTICE NO LONGER BINDING
Your notice continues to have effect until the earlier of:
- the date set out in the notice
- if the Fund has five or more members, a date three years from the day after it was first signed, last confirmed or amended by you – this situation would normally apply if your superannuation is held with an industry fund; or
- if the Fund has less than five members, when you expressly revoke it in writing – this situation would normally apply if your superannuation is held with a self-managed superfund.
ADVANTAGES FOR BINDING NOTICES
There are a number of advantages to using binding notices, including
- binding notices have the potential to allow members to protect their death benefits from disputes.
- binding notices can be used as part of a member’s overall estate plan, including, for example, as part of a tax planning strategy for infant children or an asset protection strategy for adult children.
If you would like to achieve at least one of your resolutions for this year by making a death benefit notice or reviewing your death benefit notice please contact our office.
About the author
Macrossan & Amiet
Macrossan & Amiet Solicitors is one of Queensland’s oldest law firms. It has been serving the people of Mackay and the surrounding districts since the late 19th Century, providing quality legal services to all of its clients.
About Macrossan & Amiet Solicitors
For over 100 years, Macrossan & Amiet Solicitors has been a leading local law firm in Mackay, with offices in Proserpine and Cannonvale servicing the Whitsundays region. Our experienced solicitors provide professional legal services to individuals, families and businesses across regional Queensland.
Whether you need representation in court, assistance buying or selling property, or advice on protecting your assets, our Mackay lawyers are committed to achieving the best possible outcome for you.
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