Nominating a beneficiary for your superannuation is an important decision that ensures your savings are distributed according to your wishes. Superannuation funds offer various types of nominations, and understanding which one suits your circumstances is crucial.

In this article, we will explore the different types of nominations available and provide guidance on how to make an informed choice.

Types of nominations

Superannuation funds typically offer the following types of death benefit nominations:

• Non-binding death benefit nominations:
  • This is the most common type of nomination.
  • The trustee considers your expressed wishes but has discretion in distributing the benefits among your beneficiaries.

• Binding death benefit nominations:
  • A written direction from a member to the trustee, specifying how the superannuation death benefits should be distributed.
  • Typically valid for a maximum of three years and lapses if not renewed.
  • If valid at the time of your death, the trustee is legally bound to follow it.

• Non-lapsing binding death benefit nominations:
  • A written direction that remains in place until canceled or replaced.
  • If valid at the time of your death, the trustee is legally bound to distribute the benefits according to this nomination.

• Reversionary pension nominations:
  • If you receive an income stream, you can nominate a beneficiary (usually your spouse) to automatically receive the payments upon your death.
  • The fund trustee is obligated to continue paying the superannuation pension to your nominated beneficiary if the nomination is valid.

• Self-managed superannuation funds (SMSFs):
  • SMSFs have specific rules regarding death benefit nominations outlined in their trust deeds.
  • Recent High Court rulings have addressed the requirements for binding death benefit nominations in SMSFs.

Importance of professional advice

Completing death benefit nomination forms should ideally be done in consultation with your financial adviser and an estate planning lawyer. They can provide guidance based on your specific circumstances and help ensure your nominations align with your overall estate plan.

What if there is no nomination or an invalid nomination?

If you haven’t made a nomination or if the nomination is deemed invalid, your superannuation fund will have rules in place to determine the distribution of your death benefits.

This could involve the fund exercising discretion, following a non-binding nomination process, or paying the benefits to your legal personal representative (LPR). However, if you don’t have a Will, your benefits may be distributed according to the relevant state laws for intestacy.

Regularly review your nominations

It is essential to review your superannuation death benefit nominations periodically, especially when your circumstances change. Life events such as marriage, divorce, birth of children, or changes in relationships may warrant updates to ensure your nominations reflect your current intentions. So, remember to review your nominations regularly to keep them up to date.

Conclusion

Nominating a superannuation beneficiary is a crucial step in estate planning, and selecting the right type of nomination requires careful consideration.

For personalised guidance and assistance with your superannuation and estate planning needs, we encourage you to contact Regency Partners. Our experienced team is here to provide you with the information and support you need to ensure your superannuation ends up in the hands of your chosen beneficiaries.