Superannuation nominations and death

There has recently been publicity in the media; about the long delays by superannuation funds in processing applications made by bereaved family members for payment of deceased person’s superannuation entitlements.

Some reports have referenced people waiting 15 months for the fund to make the payment, causing emotional and financial distress for the claimants.

Many people are unaware that in the absence of a valid Binding Death Benefit Nomination (BDBN), the trustee of the superannuation fund has discretion to determine who is to receive a member’s entitlements, and in what proportions. This may lead to lengthy delays while the trustee undertakes its claim staking process or end in a dispute between the trustee and the claimants who are aggrieved by the trustee’s decision.

Superannuation can only be paid to a member’s dependant (spouse, de facto or children) the legal personal representative of their estate, or to a person with whom the member was in an interdependency relationship with. 

A simple way for the member to avoid leaving it up to the trustee of the fund to make the decision about how their superannuation entitlements will be paid, and to speed up the payment process, is for a member to make a BDBN.  Most funds allow a member to make a BDBN in favour of their spouse, de facto, children, legal personal representative or person with whom they are in an interdependency relationship.  Providing the BDBN is properly made and is received by the fund, the trustee’s discretion is removed and the superannuation entitlements must be paid as the member has directed.

Most BDBN’s expire after three years.  Some funds will allow you to make a non-lapsing nomination.

It is important to get advice to ensure that your estate planning is current and that any potential claims against your estate and in relation to your superannuation entitlements are discussed to avoid unintended consequences.

If you would like further information on estate planning or superannuation and Binding Death Benefit Nominations please contact:

Deborah Anderson
Special Counsel
T 03 5225 5235
E danderson@ha.legal

Daniela Pavlovic
Principal
T 03 5225 5227 | M 0417 014 455
E dpavlovic@ha.legal