Superannuation- what happens to it when you die?
The general rule is that superannuation is not part of your estate unless you expressly make it part of your will, right? Well, maybe not. A recent case before the courts serves as a warning to make sure that you take care of the details.[/vc_column_text]
Generally, superannuation is passed directly to your nominated beneficiaries and not to your estate. However, a recent case before the Supreme Court, however, may change current belief and convention In this case, an unmarried son, James, tragically dies at the age of 40. His mother and father had an acrimonious relationship since separating when James was 5 (divorcing just under 2 years later).
At the time of his on what happens to your superannuation when you die.
When James died, he didn’t have a will. This means his estate, including his superannuation, would typically be divided equally between his parents. His estate was worth around $80,000, but his superannuation was valued at over $450,000.
James lived with his mother, so she applied to manage his estate. As the estate’s administrator, her duty was to maximize its value. However, she believed superannuation wasn’t part of the estate and tried to claim it personally. While she wasn’t a named beneficiary, she argued for a claim based on their close relationship.
Three superannuation funds paid the benefits to the mother due to her financial and emotional dependency on James. But the father’s lawyers challenged this, arguing that the mother, as the estate’s administrator, should have prioritized the estate’s interests over her own.
The court sided with the father. They ruled that the superannuation was part of the estate and should be divided between both parents. The court emphasized the mother’s duty to maximize the estate’s value.
If James had made a binding nomination for his superannuation and named his mother as executor in his will, the outcome would have been different. While these steps don’t guarantee a smooth process, they significantly improve your chances of avoiding disputes.
Key Actions:
- Review Beneficiary Nominations: Check who your superannuation beneficiaries are and if they’re still the right people.
- Update Your Will: Ensure your will is current and reflects your wishes.
- Nominate a Legal Representative: Choose a reliable person to manage your estate if you pass away.
DISCLAIMER: This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.
