In this podcast, Consultant, Felicity Wardhaugh discusses, superannuation and wills. With particular reference to estate planning.
Lorraine: “This morning we have Felicity Wardhugh from Mullane and Lindsay. She’ll be speaking to us about superannuation and Wills. Good morning, Felicity and welcome.”
Felicity: “Good morning, how are you today?”
Lorraine: “Very well. Now, Felicity, if I’m a member of a superannuation fund, what do I need to know when I’m making a Will?”
Felicity: “Well, if you are a member of a fund, when you pass away, that is what we call a cashing in advance, so if there’s money in your superannuation account when you pass away it will be paid out and it worthwhile deciding carefully what you should do, what should happen to your super because the tricky part is that funds are not necessarily covered off by your will, the assets that are covered by your will are known as your estate asset.”
Lorraine: “Why might super, not be a part of your estate?”
Felicity: “Well, that’s because super is managed within its own trust fund so legally speaking the funds are held by the trustee of the superfund and they’re not held by the person by the person making the will or the will maker.”
Lorraine: “So, how can I make super part of my estate, and would I want to?”
Felicity: “You can make it part of your estate, you can direct the trustee of the superfund to pay the death benefits into your estate if you pass away, most superannuation trustee do allow a member to make a direction that’s called a binding death benefit nomination, directing the trustee of the superfund where the pay the funds but there are times where you might want to make the super apart of your estate and there might be times where you’re not and just to give you a few examples, say you’re a single parent with small children and you’ve ensured yourself through your superfund that means that your super death benefits might be quite significant and in that situation you might want to choose the people who will manage the fund for the children if you pass away and you also might want the children to inherit when their older then 18 years of age and you also might want to establish a trust in your will to help your children and grandchildren and all of those arrangements will be made through your will and if you don’t make the arrangements through the will, the super could be paid out separately to a child at the age of 18 or held by a trustee like your ex-partner so for that reason you might want to make a binding nomination to your estate. If you’re part of a couple though and you’ve got no young children and eventually your assets for your home and super and the homes jointly owned as joint tenants, you might be better advised not to direct your super into your estate because in that situation if you were to pass away you could look close as the super being paid directly to your partner and they’ll receive the super tax free in their hand and the house will be automatically inherited by them and as a result if your partner survives you, they do save money by not having to pay for administration of the estate. Another example if you’re single, you have no children and you have really definite views about who you want to inherit your estate when you pass away, you might want your super paid into your estate so that your will directs where the super goes because there’s a strict hierarchy of people who can inherit your estate if you die without a will so it’s very important to make a will in that situation. So for example you might be estranged from your father and you want your sister to inherit your estate and in that situation if you direct the super into your estate, you can leave the estate to your sister in your will otherwise your father might inherit and you can’t make binding death benefits nomination normally to your sister, they’re not people that you can make to receive your super and fourthly so you’re apart of a blended family you might wish to divide your estate and your super between your partner and children from another relationship and if you make your partner the executor of the estate which often people do, then your partner might, if they try to claim the super for themselves, might be open to legal challenge but if you made a binding death benefit nomination in that case directly to your partner you would prevent such a challenge occurring so there’s lots of different scenarios in different ways you have to consider the situation.”
Lorraine: “So, how is a binding death benefit nomination made?”
Felicity: “Each superannuation fund has its own rules set out in a Trust Deed about how the super fund operates and most super funds when they offer binding death benefit nominations, they’ll have a clause on their website about how to fill out a form to make the nomination and its worth noting that some superfunds only offer what they call lapsing notices and that means the notice lapses typically after a 3 year period so in that situation, its important not to see it as a see and forget form.”
Lorraine: “Should I complete a form myself?”
Felicity: “Well, as you can see there’s lots of things to consider and apart of estate planning it can be wise to consult a lawyer who can look at your special circumstances and decide what’s right for you and also whilst a form looks quite easy to complete there has been situations where legal challenges have been made because the form has not be properly filled out, so its all those reasons, its wise to get some advice.”
Lorraine: “Thank you so much, Felicity for you’re very informative segment.”
