WHEN YOUR WILL IS NOT ENOUGH
It goes without saying that having an up-to-date Will in place is paramount to ensure that your personal property is distributed in the way that you wish when you die.
However, many people assume that because you have a Will in place, that this will also decide how your Superannuation is dealt with upon your passing.
When it comes to the death benefits associated with your Superannuation, there are additional procedures that you must have in place to gain certainty and control of your preferred beneficiaries after you pass away.
The specific procedures we're talking about include the Binding Death Benefit Nomination (BDBN), which must match up with the requirements of superannuation law.
If you have a Self-Managed Superannuation Fund (SMSF) it must also match up with the Trust Deed for this.
If you do not have the above documentation in place, you could be at risk of:
- A person against your wishes receiving entitlements;
- A person against your wishes being in control of your Superannuation or SMSF;
- A person who isn't classified as an SMSF 'dependent' not receiving entitlements;
- A costly estate litigation unfolding between your preferred beneficiaries.
Upon your passing, the remaining trustees of your SMSF or your nominated legal personal representative have the final say to whom your superannuation death benefits are paid, unless you have taken the appropriate steps.
Case Study - SMSF
Wendy and Michael are a married couple both aged 65 and both members and trustees of their SMSF. Wendy has one adult child from a previous marriage and in her Will has nominated for Michael and her adult child to have her Estate and death benefits equally split. Michael is Wendy's nominated legal personal representative.
Wendy unexpectedly dies, leaving Michael to act on her behalf as trustee of the SMSF. Despite what Wendy's Will states, as sole trustee of the SMSF, Michael allocates all death benefits to himself.
There is nothing legally that her adult child can do with the absence of any other documented measures and as sole controller of the SMSF. Wendy's Will is irrelevant when it comes to distributing SMSF benefits.
To avoid these risks, you must ensure your SMSF Trust Deed and BDBN both match and comply with superannuation law.
Wrights Chartered Accountants understand the complexities of SMSF set up and ongoing management. Our partners, Dan, Anthony and Chris are all approved SMSF Auditors and are here to help you navigate the SMSF landscape.
Contact us to help decide if a SMSF is right for you or help with your existing fund.
Wrights SMSF Advice Pty Ltd (ASIC No. 1260151) ABN 49 0622 867 770 is a Corporate Authorised Representative of SMSF Expert Pty Ltd ABN 17 155 686 356, Australian Financial Services Licence Number 445113