Superannuation is an essential part of planning for your future, ensuring that you have the financial resources to live comfortably in retirement. But have you ever considered what happens to your superannuation savings when you pass away? This is where binding death nominations come into play. Understanding how they work can give you peace of mind, knowing that your hard-earned savings will go to the people you care about most.

What is a Binding Death Nomination?

A binding death benefit nomination (BDBN) is a legal instruction to your superannuation fund, directing how your superannuation benefits should be distributed when you die.

Unlike a will, which covers the distribution of your personal assets, your superannuation is held in trust by your super fund, meaning it doesn’t automatically form part of your estate. This is why a binding death benefit nomination is so important—it ensures that your superannuation benefits are paid to your chosen beneficiaries.

Why Make a Binding Death Benefit Nomination?

Without a binding death benefit nomination, your super fund trustee can decide who receives your superannuation benefits. While trustees will generally pay benefits to your dependents, this process can be lengthy and may not align with your wishes. By making a binding death nomination, you ensure your super is distributed according to your specific instructions, minimising potential disputes and delays.

For example, if you want your superannuation to go to your spouse and children, a binding death nomination allows you to specify the exact proportion each beneficiary should receive. This level of control is especially important in blended families, where the risk of disputes is higher.

Who Can You Nominate?

Under superannuation law, you can nominate specific people to receive your superannuation benefits. These typically include:

• Your spouse: This includes de facto partners and same-sex partners.
• Your children: Biological, adopted, or stepchildren are all eligible.
• Financial dependants: Individuals who are financially reliant on you at the time of your death.
• Your estate: You can choose to have your super paid into your estate, where it will be distributed according to your will.

It’s important to note that friends or extended family members who don’t fall into these categories cannot be nominated unless they are financially dependent on you.

Making and Maintaining a Binding Death Benefit Nomination

To make a binding death nomination, you’ll need to complete a form provided by your superannuation fund. This form must be signed and witnessed by two people who are not beneficiaries.

Once in place, the nomination is typically valid for three years, after which you’ll need to renew it to ensure it remains valid. Some funds offer non-lapsing binding nominations, which don’t need to be renewed.

It’s also a good idea to review your binding death nomination regularly, particularly after major life events such as marriage, divorce, or the birth of a child. This ensures that your nomination reflects your current wishes and family circumstances.

What Happens If You Don’t Have a Binding Death Nomination?

If you don’t have a binding death nomination in place, the trustee of your super fund will decide how to distribute your superannuation benefits. This process can be time-consuming and may not result in the outcome you desire. Additionally, without a binding death nomination, there is a greater risk of disputes among potential beneficiaries, which can lead to delays and legal complications.

A binding death nomination is a straightforward yet powerful tool that allows you to control who receives your superannuation benefits when you pass away.

By taking the time to set up and maintain a binding death nomination, you can ensure that your superannuation is distributed according to your wishes, providing security and clarity for your loved ones.

Don’t leave it to chance—speak to your super fund today about setting up a binding death nomination and take control of your financial legacy.