Finance Your Budget Ask the Expert: How to manage superannuation in your will
Updated:

Ask the Expert: How to manage superannuation in your will

Licensed financial adviser Craig Sankey answers your burning finance questions. Photo: TND
Share
Twitter Facebook Reddit Pinterest Email

Question: My super fund has said I haven’t nominated anyone as a beneficiary. Doesn’t my will take care of my super if I die? Does it override my super beneficiary nomination form?

Answer: Superannuation increasingly makes up a large proportion of an individual’s assets to be considered in their estate plan.

It’s important to know what an ‘Estate Asset’ is, as these form part of your estate and can be dealt with via your will. Examples include individually-owned assets such as bank accounts, term deposits, shares and property, or assets that are owned as ‘tenants in common’.

Other assets are not automatically included in your estate, such as assets owned as ‘joint tenancy’, which would include bank accounts and properties held in joint names, as they pass to the survivor.

Superannuation is also a non-estate asset.

Within your beneficiary nomination form available from/provided by your super fund, you could nominate ‘your estate’ and then your super would be dealt with through your will.

Alternatively, you could nominate one or more eligible beneficiaries who could then receive the funds directly without the need for funds having to go through to your estate.

Eligible beneficiaries include:

  • Spouse
  • Children
  • Someone who is financially dependent on you
  • Someone in an interdependent relationship with you.

You can either make a ‘non-binding’ or ‘binding’ nomination.

With non-binding nominations, the trustees of your super fund are not required to follow your instructions.

They will be guided by what you complete in the nomination. However, they have full discretion to pay your death benefit to another eligible beneficiary or your legal personal representative, which may not reflect your wishes.

Most super funds offer binding nominations. Some binding nominations are ‘lapsing’, which means they need to be resubmitted every three years to remain valid.

Others are ‘non-lapsing’ and will continue until you either revoke or update the nomination.

If a valid binding nomination is in place at the time you pass away, the trustees of the super fund are required to distribute your super benefits to the person(s) you have nominated.

I would strongly recommend speaking with an estate planning specialist, such as a lawyer, to ensure your will and superannuation beneficiary nomination reflect your wishes and complement one another.

Question: If I retire with too many assets to get the age pension, does that mean I don’t receive the pensioner card?

Answer: A Pension concession card is highly sought after, as it provides cheaper health care, medicines and some discounts.

You are automatically entitled to the card if you get certain payments from Centrelink, such as the age pension, disability support pension or carer payment.

If you do not qualify for the pensioner card, you may still be entitled to the Commonwealth Seniors Health Card if you are over age pension age; do not receive any government or DVA income support payments such as age pension; and your annual income is below $55,808 for singles, or $89,290 (combined) for couples. There is no asset test.

While not as generous as the pensioner card, the Seniors Health Card does provide the following benefits:

  • Cheaper medicine under the Pharmaceutical Benefits Scheme (PBS)
  • Access to PBS prescriptions, generally without charge, for the remainder of the year after reaching the PBS Safety Net
  • Bulk-billed doctor visits at clinic’s discretion
  • Low out-of-hospital medical expenses through the Medicare Safety Net
  • Energy supplement
  • Certain state, territory and local government concessions. These concessions can vary based on the state or territory.

If in the future, you do become eligible for the age pension, you will at that point automatically receive the pensioner concession card.

Craig Sankey is a licensed financial adviser and head of technical services & advice enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.