Explained: Who you can name as beneficiary of your super

Most Australians have money in super, which makes it super important to nominate a beneficiary. But did you know there are only a limited number of people you can nominate?

You may think of super as an asset you own, but that is not technically correct. During the accumulation phase, your super is held by the trustee of your super fund and invested on your behalf.

Depending on when you were born, those funds can be moved into pension phase or transferred to you upon retirement in whatever manner you choose. But should you pass away with super in either phase, you’ll need to have told your fund who you’d like the money to go to.

You might assume you could nominate anyone you wish. But you’d be wrong.

Under the superannuation legislation, there are actually very few people in your life you can nominate. They include: your spouse or partner, your children, anybody financially dependent on you when you die, and your estate or legal representative, known as an executor.

It does not include grandchildren, unless you have legally adopted them, even if you are raising them as your own.

This means any other family members – including parents and siblings – cannot be nominated.

This introduces problems. For starters, not everybody has a spouse and/or children to leave it to. It would be natural in that situation to want to leave your super to family or a cherished friend.

It also has the potential to create a situation where a person’s super may be awarded to an abusive spouse, rather than to the person’s family, against their wishes.

This is where nominating your legal personal representative comes in.

This is often the person nominated as executor of your estate. If they are listed as beneficiary, then the money is paid to your estate and can be dispersed according to your wishes.

If you don’t nominate anyone as beneficiary, then it’s up to the discretion of your super fund trustee as to where your money goes, which may not be where you want it to.

Guy Freeman, managing director and senior financial adviser at My Wealth Solutions, told The Sydney Morning Herald too many people think super is included in your estate and believe making provisions in a will is enough. But that’s only half the job.

“If you don’t nominate anyone to receive your super, then it will be up to the trustee’s discretion. They will refer to superannuation law and may pay it to someone you did not intend to receive it,” he says.

“Most people may also not realise that your super is not automatically part of your estate. So you have to make special arrangements for this.

“Practically, you should have an idea of who you would like your super to go to, then you need to ensure your will is kept up to date with your wishes – super included.”

Have you nominated a beneficiary for your super? Is it still current and correct? Let us know in the comments section below.

Also read: How to move super funds

Brad Lockyer
Brad Lockyerhttps://www.yourlifechoices.com.au/author/bradlockyer/
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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