Your super may well be one of your most important assets, so making sure you have clear instructions in place on who will benefit from your super, should you pass away can give you real peace of mind.
For members of REI Super, from 1 October, 2019 you will be able to put a binding nomination in place.
What is a binding nomination and what does it mean to you?
Nominating beneficiaries is an important part of your super account. If you have a preferred (non-binding) nomination this tells the trustee who you would like to receive your benefit in the event of your death. The trustee is not bound by a preferred nomination but will take into account when determining who receives your benefit.
A valid Binding Death Nomination on the other hand is a legal document that directs trustees to do exactly as you wish, no questions asked. It directs the trustee to pay your death benefit as you have nominated, provided your nominated beneficiary is your dependant or personal legal representative.
Things to consider before you put a binding nomination in place
- A valid binding nomination ensures your wishes will be followed
For some of us, we have complex blended families, and it is this factor that gives rise to many death benefit disputes in the Australian Financial Complaints Authority (AFCA). Having a binding death nomination can remove all confusion and ensure those in your family benefit as you want.
- Care needs to be taken over who is nominated in order to make it valid
Your superannuation must be passed to either a ‘superannuation dependant’ or legal personal representative. By superannuation dependant, we mean anyone that is financially dependent on you, for example your spouse, child or someone in an interdependency relationship.
- Your Will won’t cover your super
Many people don’t realise that super is governed by different laws than those that cover your other assets such as property, investments and savings.
This means that your Will does not automatically cover your superannuation. Making sure your will and super beneficiaries are aligned and up to date is important if you have specific wishes you want to happen on your death, or you want to remove any kind of confusion or disagreements on your death.
- It’s not just about your super balance
For some people, they don’t consider their balance significant enough to worry about. But not only are they not taking into account the fact that with regular contributions and time, your super will grow into one of your most valuable assets.
Moreover, you may also have death insurance as part of your super benefits, which can be a large amount. Making sure you are proactive and future thinking is important so that you can take care of your loved ones when you’re no longer around.
- You must keep it up to date
A binding nomination is fixed in time and if your family make up and dependencies change over time, you must ensure that a binding nomination is updated to reflect this. More over, you must renew it every three years.
How to put one in place
- Check your beneficiaries are valid and eligible to be nominated.
- To nominate, complete the Binding death benefit nomination form (available 1 October).
- Consider advising your lawyer so they are aware of it was well.
- Make sure you keep your nomination up to date, (we will remind you to review every 3 years)
A financial adviser can help you navigate the financial side of important life events. Call 1300 13 44 33 to see how we can help you.
The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129.