Gary Lucas Financial Advice | No. 1 Certified Financial Planner in Byron Bay
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Financial Insights

 

ADVICE TO NAVIGATE THE COMPLEX WORLD OF FINANCE & BUSINESS

What Happens To Your Superannuation When You Die?

 
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There is a common misunderstanding that upon death, your superannuation will be managed along with the rest of your Estate (usually referred to as your Will).

While this can be the case, it doesn’t happen automatically.

Superannuation is not regarded as an ‘Estate Asset’ and unless you specifically ask your superannuation fund where to direct the funds upon your death and have your request officially recorded, your super balance will be dealt with separately from the rest of your Will. If you have not made sure of this yet, when you die, the trustees of the superannuation fund will decide where to allocate the proceeds within your super. These trustees are usually members of an organisation linked to the fund itself.

All super funds give the option to nominate to how you wish your super death benefit to be paid out; you can direct it to your estate, or to a specified person or people.

It is worth clarifying this issue either online or by looking at your statements, so you know what your fund has recorded and whether it matches your intentions. If not, it can easily be changed.

If you are receiving a pension, you can nominate a specific person to receive your pension payments after your death. This is known as a ‘reversionary pensioner’.  You can even nominate your child as your reversionary beneficiary, in which case they will receive your pension payments until they reach age 25. Thereafter the remaining balance of the superannuation pension account must be paid to the same child as a lump sum.

The tax treatment of superannuation death benefits is determined by the status of the person receiving the benefit, and whether or not they meet the definition of being your ‘dependent’. This is an area that needs to be managed carefully. Advice can add value to your decision, so if this is an area that is relevant to you, check in with me and we can discuss the best plan of action for your specific scenario.