Incorporating your superannuation entitlements into your estate plan is crucial, particularly when they are not part of your estate. Superannuation can lead to substantial distributions to beneficiaries, emphasizing the importance of aligning payments with your wishes.
A non-binding nomination guides your superannuation fund on distributing funds after your death, but the trustee ultimately decides the recipients, possibly deviating from your intended beneficiaries.
On the other hand, a binding death benefit nomination (Binding Nomination) allows you to ensure that your superannuation reaches your intended beneficiaries, compelling the fund to comply with a valid nomination.
Here are five key aspects of Binding Nominations:
- Limited Nominees: You can only nominate your legal personal representative, spouse, children, or someone in an interdependency relationship with you.
- Expiry: Binding Nominations generally expire every three years, though some funds offer non-lapsing options.
- Careful Preparation: Valid nominations require careful preparation, including eligible nominees, a total allocation of 100%, and proper witnessing.
- Submission to Trustee: To be effective, submit your Binding Nomination to the trustee; it’s not a set-and-forget process.
- Broader Impact: Binding Nominations extend beyond superannuation, influencing how insurance proceeds within the fund are paid.
In conclusion, considering the significant impact on beneficiary distributions, including a Binding Nomination in your estate plan ensures your wishes are upheld.