Legal Comment by Mark Illidge of Hinterland Lawyers

August 2007

When you die the trustee of your superannuation fund decides which of your dependants will receive your super. Many people are blissfully unaware that their entire super and often their insurance benefits are up for grabs amongst the dependants that you leave behind.

Most superannuation trust deeds entitle a member to nominate a beneficiary. It is not uncommon to find that will-makers cannot recall whether or not they have nominated a beneficiary. If there is no nominated beneficiary then you should rectify this and review your nomination on a regular basis as it is only valid for three years.

The trustees of some superannuation funds may disregard the nomination by the member, but where this occurs the trustees usually resolve to pay the funds to the member’s estate. Therefore it is preferable to nominate a beneficiary to the trustees of the superannuation fund, as well as ensuring that your will contains an express provision that the nominated beneficiary is to receive the superannuation monies. However, when trustees pay the funds to the estate, litigation may result. This is because the estate now includes an asset that may be attacked under a Family Provision Application or family law property settlement commenced prior to the death of the member.

It is possible to circumvent this problem in self-managed superannuation funds and some industry funds. The trust deed can entitle a member to make a binding nomination of the beneficiary of the superannuation monies payable in the event of the member's death. So to make life simpler for the intended beneficiary/ies of your entire estate, it is important to follow this issue through with your super fund.

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