Superannuation & Estate Planning

In the context of estate planning, superannuation cannot be ignored.  Consider the following:

  1. Any person who has been in the workforce from 1992 will have a superannuation interest as a result of the introduction of compulsory superannuation contributions.
  2. Given that there are still significant taxation concessions which apply to superannuation, more wealth is being transferred out of individuals’ names and into superannuation structures.
  3. In many cases, a person’s superannuation has eclipsed their family home as their most valuable “asset”.
  4. Several trillion dollars has been invested in superannuation in Australia.

It is often not recognised that superannuation assets will not form part of a person’s estate on their death.  Superannuation assets will only form part of a person’s estate if the superannuation fund (generally following the exercise of a discretion on the part of the trustee of the superannuation fund) pays the deceased member’s benefits to the estate.

Therefore, sometimes a person’s will has no direct impact as to how a deceased’s superannuation death benefits are distributed.

Obtain clear and detailed advice as to:

  • who can receive superannuation assets;
  • in what forms the superannuation death benefits can be paid;
  • who will make the decision as to whom, and how, the superannuation death benefits are to be paid;
  • how to give effect to an estate plan in relation to superannuation.

Once the above factors are taken into consideration, the following can be determined:

  1. The rules prescribed by the superannuation fund trust deed and whether, in the case of a self-managed super fund (SMSF), the rules of the trust deed need to be amended.
  2. The use of a Binding Death Benefit Nomination Form which offers an opportunity to a member of a superannuation fund to nominate which eligible recipients (i.e. the member’s surviving spouse, children, financial dependents or his or her estate) ought to receive the member’s superannuation assets.
  3. In the case of an SMSF, who will control the SMSF following the death of a member or trustee of the SMSF.
  4. Whether provisions need to be made in the will to deal with any superannuation benefits which may be paid to the estate in consequence of the trustee following a binding death benefit nomination or the trustee exercising a discretion to pay the superannuation benefits to the estate.

Charles Beresford is a partner of Clelands Lawyers in Adelaide, South Australia, practising in Wills, Estates & Succession Planning law.