Why you should nominate a beneficiary

CW: death, financial abuse, domestic violence

Picture this: a friend passes away suddenly. She has not nominated anyone to receive her super, and the attached insurance benefit. Her boyfriend makes a claim for all her assets.

It recently came to light that her boyfriend was both physically and emotionally abusive. Since she had not nominated a beneficiary, he was deemed the rightful recipient – despite her family’s objections.

Regardless of your personal situation, informing your super fund as to who should receive your super is one of the most important actions you can take. For most people, outside of perhaps owning a home, super is likely to be their largest asset!

Nominating a beneficiary will not only  prevent your super being paid to the wrong person, it will also enable a faster payment to be made to your loved ones and makes the process easier on loved ones.

There are rules about who you can nominate and what processes you need to stick to.

We’ve answered a few common questions about beneficiary nominations and why it’s important.

Read on to learn:

●      Who you can nominate

●      Why your super isn’t part of your Will

●      How to nominate a beneficiary

It may surprise you to know that under superannuation law, if you pass away, your superannuation must be paid to specific people! The rules don’t allow you to nominate a charity. You can’t nominate your family of origin (parents or siblings) or a friend, unless they are financially dependent or interdependent on you.

However, if you don’t have a financial dependent, there is a way to ensure your super goes to those you choose.

• A spouse / partner

• A child (of any age)

• A financial dependent / interdependent (eg. A sibling with whom you live and share living expenses)

• Your Legal Personal Representative (LPR)

If you nominate your LPR as the beneficiary of your superannuation account, it effectively means that you are sending your super to your estate. This means you need to have a Will in place in order to receive and distribute those funds.

Super is not considered part of your estate due to the trust structure that is in place. If you do nominate a valid beneficiary, your super is paid directly from your super fund. It bypasses your Will. (Yep, who knew?!)

Your super balance, and any relevant insurance, is held in trust for you, by the fund Trustee — until you reach an age where you are able to access it, or you die.

Your Will covers all the other things you own, such as your bank account, car, home or sentimental items.

Nominating your superannuation beneficiary is important, and doesn’t take long!

You have two choices, binding and non-binding. One is quicker, the other is much stronger:

1. A binding nomination controls who will receive your super and any insurance benefits. The Trustee is obliged to follow your nomination, providing it is valid. Binding nominations at Verve Super do not need to be renewed. They are non-lapsing. This means it’s important to make changes if your personal situation changes.

2. Non-binding nominations can be made through the Verve online portal. Simply log in to your account and add the details of your preferred beneficiary. It’s very quick and should take you less than 3 minutes.

Please note that a non-binding nomination is a recommendation only and will be considered by the Trustee when it reviews who will receive your super. The Trustee retains some discretion.

A binding nomination makes the process of paying a beneficiary much simpler and clearer, it’s the stronger choice over a non-binding nomination. It leaves no doubt as to who the beneficiary should be. A non-binding nomination is better than no nomination at all though!

Regardless of the type of nomination that you choose, it’s worth noting that you can nominate more than one recipient, provided they meet the criteria for a beneficiary.

 Another resource that you might find useful is the MoneySmart website.

Jump into your Verve account to quickly add your non-binding nomination, or grab the binding nomination form and tick this off your To Do list right away.

Don’t forget, we are available to support you and lend a hand, so please reach out with any queries. Call us on 1300 799 482 or email hello@vervesuper.com.au