SUPERANNUATION BENEFIT NOMINATIONS

It’s not really something that we like to talk about but, having said that, let’s take a look at what control you may have over your superannuation should you pass away.

There are various ways trustees can plan the distribution of superannuation to beneficiaries. With the event of blended families now more common it is wise consider who should receive superannuation benefits.

Superannuation can, but does not normally, form part of your Estate or Will and whether you are a member of an SMSF or a public offer fund you should review your nominations on a regular basis. Too often we get busy with our lives and forget that if something should suddenly happen to us our benefits may go in directions which are not according to our latest wishes.

The most common form of nomination in an SMSF is an indicative nomination and, while this is normally binding on the trustee, if there are any concerns then a binding death benefit nomination should be set in place. A binding death nomination will offer more certainty and may cover circumstances with different levels of complexity offering different outcomes. A nomination made to a public offer fund will most likely only be a very simplistic form of binding nomination.

Normally if a pension is active in an SMSF then the best course of action is for it to be reversionary to a spouse, but this doesn’t mean that this is necessarily the only option to be considered.

Issues that might be covered in a more complex binding death nomination are:

• Provision of benefits for multiple beneficiaries
• Provision of benefits for alternative beneficiaries
• Allocation of specific investments to specific beneficiaries

Along with binding death benefit nominations trustees should consider having an enduring power of attorney in place.

In conclusion estate planning in an SMSF does not merely need to be the nomination of a single beneficiary and can include multiple layers, specific terms and special conditions. However, the most important issue is that whatever nomination is in place, it must be reviewed on a regular basis.