Nominating your super beneficiary is something you have most likely been asked to do if you have a superannuation fund.
However, super fund trustees can only pay your super death benefit to eligible dependants* or to your legal personal representative (LPR) who is generally the executor of your Will. If you haven’t elected a valid beneficiary, the super fund trustee generally decides who your super goes to.
There are important things you should be aware of regarding super dependants.
Who can you nominate as a super dependant?
Spouse
A spouse includes a legally married spouse or de facto spouse, both same sex and
opposite sex.
A spouse can be a person you’re legally married to but estranged or separated from. So, if you haven’t formally ended a marriage, your husband or wife is still considered your dependant under
superannuation law. And, while you can’t be legally married to two people, it is still possible to have two spouses – a legally married spouse and a de facto spouse.
Child
A child includes an adopted child or a step-child. Even though a step-child is included in the definition of a child, if you end the relationship with the natural parent or the natural parent dies, the child is no longer considered your step-child.
However, they may still be considered a financial dependant or in an interdependency relationship with you and could therefore continue to be a beneficiary of your super.
Financial dependant
Generally, a person is financially dependent on you if they relied on you for necessary financial support just before you pass away. A person may be wholly or partially financially dependent on you.
Interdependency relationship
Two people have an interdependency relationship if they live together and have a close personal relationship. One or each of them must also provide financial support to the other and at least one of each of them needs to provide domestic and personal care to the other.
Two people may still have an interdependency relationship if they do not live together but have a close personal relationship. For example, if they’re separated due to disability or illness or due
to a temporary absence, such as overseas employment.
Who is not a dependant?
Generally, your parents, siblings or friends who don’t live with you and who are not financially dependent on you or in an interdependency relationship with you, are not dependants.
If you do not have a dependant, you should direct your super to your LPR and prepare a Will which outlines your wishes.
Legal personal representative
An LPR is the person responsible for ensuring that various tasks are carried out on your behalf when you die. If you nominate your LPR as the beneficiary of your superannuation, you are nominating the executor of your Will or if you die without a Will, the administrator of your estate. Your Will should outline the proportions and the people you wish your estate, including your super, to go to.
* In this article a dependant refers to a 'SIS dependant' which is an eligible person under the Superannuation Industry (Supervision) Act 1993 that a member may nominate as a beneficiary.
Source: Australian Executor Trustees
Disclaimer: This newsletter has been issued by Consultum Financial Advisers Pty Ltd (Consultum) | ABN 65 006 373 995 | AFSL 230323 an Australian Financial Services Licensee.
Any advice or information in this publication is of a general nature only and has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your personal objectives, financial situation and needs. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Past performance is not a reliable guide to future returns.