Superannuation Death Benefits

Where your superannuation goes after you die depends on whether you have made a valid binding death benefit nomination. If you have one the super fund trustee is bound to follow that nomination.  The absence of one or if you've only made a non binding nomination means the trustee can decide who should receive your super and any life insurance connected with it.

Case 12-00-1028245 (concerning Caresuper Pty Ltd) is a recent case where the deceased member had not made an effective BDBN whilst alive. The member had an estranged wife, two adult children, and was living with his mother. His will gave his estate to his nephew. All these people (except the son) had made claims to the trustee for the super benefit. The trustee decided to give the whole amount to the estranged wife. The executor of the will made a claim to AFCA to set aside that decision.

AFCA did set the decision aside, and determined that while all the claimants were eligible under the terms of the trust deed, only the wife, daughter and estate of his mother (who had since died) should be entitled to share the benefit. The decision was made on the basis that the wife and daughter were dependants, and the mother had an interdependency relationship with the member, but none was financially dependent on the member, so they should be treated equally. The nephew was not a dependant, or financially dependent on the member, and didn’t have any expectation of receiving financial support from the member, so it wasn’t reasonable for him to be given any of the super death benefit.

Key Takeaway: Make sure you have a BDBN in place, and if it is a lapsing one, make sure you update it (usually every three years). Most super funds have allowances for non lapsing BNBN, which can be useful if there are unlikely to be any changes in your circumstances and wishes.