Are Superannuation Funds bound by beneficiary nominations?
When you nominate a beneficiary with your superannuation fund this does not legally bind the Trustee of the superannuation fund. This means that the Trustee can make the final decision as to who will receive your superannuation benefits, taking into account your circumstances and relationships at the time of your death.
Binding Nominations
To ensure your wishes are upheld, a binding death benefit nomination will need to be put in place. In the event of your death, the Trustee of your superannuation fund must pay your superannuation benefit to your nominated dependant, unless it would be unlawful to do so.
You can nominate who you wish to receive your death benefit as long as they would be considered your dependant, or you can elect for your benefit to form part of your estate to be dealt with under your Will by nominating your legal personal representative. A dependant for the purposes of a Binding Nomination can be any of the following:
- a spouse (including de facto and same-sex)
- children of any age (including adopted or ex-nuptial)
- any person(s) financially dependent on the member
- any person(s) in an interdependency relationship with the member
- a legal personal representative (LPR).
Types of Binding Nominations
You can make a binding, non-binding or non-lapsing nomination to direct the Trustee on how you would like your benefits to be paid in the event of your death.
Depending on which superannuation fund you are with will determine whether you can make a binding, non-lapsing or non-binding nomination to the Trustee.
- A binding nomination is valid for three years, unless it is renewed, changed or cancelled. If you do not renew it before the end of the three-year period from last signing, it becomes a non-binding nomination.
- A valid non-lapsing binding nomination does not have an expiry date and will remain in place until you either revoke or update your nomination.
How do you make a Binding Nomination?
Depending on which Superannuation Fund you are a member with will dictate which Binding Nomination you are able to make (Binding or Non-lapsing). You will also need two independent witnesses. Once the completed and signed Nomination Form is returned to the Trustee of your Super Fund, it is important to confirm that they have received, accepted and processed the form in order for the Nomination to be binding.
Have questions in relation to your estate planning? Get in touch with Legali
Writer: Lily Johnston Of Legali
