Retail funds
If you are in a retail super fund, then your choices as to whom and how your super is paid after you die may be limited.
You will generally be able to specify ‘who’ gets your super, and in what ‘proportions’.
You generally will not be able to specify specific amounts, nor specify even basic “what if” scenarios, such as “If Jonny is under 25 he is to get 75% of my super, otherwise my super is to be split equally among my children”.
This is because it is impractical for the trustees of these large funds to administer the complexity.
Self-Managed Funds
If you have a self-managed super fund (SMSF), and a good Fund Deed, then your options are likely to be much broader.
You can put in place a binding nomination that lasts longer than 3 years.
You can make part of your nomination binding, and part non-binding. This may be useful when you need the trustee to have some discretion, but not complete discretion, e.g. binding to your spouse, and non-binding to your children.
You can specify not only ‘who’ will receive your benefits, but you may specify fixed or proportionate amounts.
You can make conditional directions, e.g. “If Jonny has not yet reached 25 then he is to get 50%, otherwise he is to get 25%”.
You can direct a specific asset to a specific beneficiary, e.g. “the shares in BHP are to go to Jenny, and my interest in the investment property is to go to James”.
You can nominate for a super pension to be established for a pension beneficiary. This is useful when you want to keep assets within super for your beneficiaries, rather than have them paid out.
You can set up a child pension if your children satisfy the relevant criteria, or otherwise have the benefits paid elsewhere.
Call us to discuss how to use SMSF nominations and rules to effectively manage your super benefits.
Using your Will to deal with your super
Only ‘SIS dependents’ can receive death benefits directly from your super fund. These are limited to your spouse, your children, and people financially dependent on you.
If you want to give you super to someone else, e.g. your grandchildren or a trust, then you need to direct it to your personal ‘estate’ and deal with it through your Will.
Once the super is in your estate, you can direct it how and where you like, e.g. to a non-sis dependent, such as your grandchildren, to a family trust, into a testamentary trust, into an education trust, or to a charity.
Call us to discuss how to use your Will to effectively manage your super benefits.
What can go wrong?
- People do not make a nomination and the trustee directs the benefits to people in a way that is inconsistent with their broader estate planning.
- People nominate someone who is not a ‘sis dependent’ – and therefore cannot receive the benefits.
- People nominate someone who is not a ‘tax dependent’, and end up paying thousands of dollars in unnecessary tax.
- Super ends up in your personal estate and is not effectively dealt with through your Will.
- People do not read the SMSF Fund Deed, and try to do something that is not provided for in the deed.
Super nominations are often not given as much thought as they should be – often with major unintended consequences. Invest some time and thought to get this aspect of your estate planning in order.
Maybe it’s time to put your affairs in order, and create a modern integrated estate plan before it’s too late?
Be cautious – we strongly recommend that no decisions be made without first obtaining professional advice.
When it comes to Wills, asset protection & estate planning in Australia, you can trust the oldest law firm in South Australia, Genders & Partners to guide you through the tough decisions you must make for your family’s future care and welfare.
If you have any questions, or would like further information, please call or email us. Would you like a quick phone call to discuss?
Feel free to phone or email us or use this link and book a timeslot for a free 15-minute phone consultation on my schedule: https://calendly.com/genders
Can’t get to us? No problem. We now offer home or office visits to many areas in the Adelaide metropolitan area at no additional cost. Call us on 08 8212 7233 to enquire further.
We can help you to protect yourself and your family. We look forward to being of service.
eBook “7 Things You Must Know Before You Make Your Will”
In this eBook you will Learn:
Why home-made Wills can be a LOT more expensive than you might think.
The secret weapons used by the rich & powerful to protect their assets, and transfer their wealth two or three generations ahead.
How Estate and Trustee Companies make BIG money from “free” Wills.
The Most Common Estate Planning Mistakes, how they can cost your family a fortune, and How to Avoid Them.
The Elements of a Sound Estate Plan – why a Will alone is not enough.
How to Make Sure Your Assets Stay in Your Family and are not lost to creditors, lawsuits or ex-spouses.
How to guard against challenges to your Estate after you’re gone.