Isn’t it obvious who my beneficiary is?

This is a regular question that arises when I ask a client to sign a binding death benefit nomination form for their super fund.  It comes with a simple answer – not to your super fund! 

A bit of background:  

  • Your super benefits are not covered by your will, because super funds have a trustee who makes decisions on your benefits. You need to nominate your beneficiary so that the trustee knows who to pay your benefit to, if you were to die.  
  • You can’t just nominate anyone to be your beneficiary. It needs to be someone who is eligible, such as a spouse, a child or anyone financially relying on you. 
  • You can also nominate your benefits to go to your Will (especially common for people who don’t have an eligible beneficiary) – you nominate your Legal Personal Representative. 
  • If you are in pension phase you have the option to nominate a reversionary pensioner i.e. your spouse who will continue to receive your pension payments when you die. 

    A super fund could probably easily track down your spouse & kids in the event of your death by sending a letter to your home address, but if you don’t have a binding death benefit nomination in place, the trustee is obligated to look further for other possible beneficiaries. They will be requiring information from your executor on all possible beneficiaries.  

    The main problems that are experienced: 

    • Your family is grieving for your loss right now – they don’t really want to be bogged down in paperwork. 
    • Your family may require funds for your funeral or their continuing living expenses. Without a nomination in place, you can expect your claim to take at least a couple of months to be processed.  
    • Taxation issues – if you nominate adult children to receive your benefit, they will need to pay tax on the funds they receive, whereas your spouse won’t. 

    A good outcome 

    We had reversionary pensions in place for one of our recently deceased clients on two super pension accounts. With a death certificate and one form per super fund, we were able to get the pension moved to the remaining spouse’s name within weeks. The spouse was happy that we got this done efficiently and with not much of a break between pension payments.  

    A bad outcome 

    A client’s husband had an industry super fund without a death nomination in place. We are currently working with her to obtain a certified birth certificate from the U.K. for one of her adult children as the trustee needs to determine his children & their eligibility. This was after they wouldn’t send us the initial paperwork to assist the client and sent subsequent paperwork after we sent in the completed application form, certified death certificate and certified drivers licence.  

    Most of the time it is obvious to you who your beneficiary is. You just need to make sure you tell your super fund and that what, and how, you tell them is valid.   

    If you have any questions about how your super fund is set up or would like some help to make sure you get this right then please get in touch. It could save your family a lot of unnecessary hassle when the time comes. 

    The information in this blog post is general advice and does not consider your individual objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Should you have any questions please contact us on 02 9232 6800. 

    I was drawn to financial planning because I want to help people. I’ve always helped my family with their finances and seen first-hand the impact a good financial plan can have in our clients lives.