What is a binding death benefit nomination?
Superannuation is not an estate asset; on death it does not automatically flow to the estate of the deceased. A binding death benefit nomination is a legally binding nomination that allows you to advise the trustee who is to receive your superannuation benefit in the event of your death. Binding nominations require a formal nomination, much like a Will, and must be renewed every three years, or whenever your circumstances change.
Only 'dependants' can be nominated. Superannuation law defines a dependant as:
- a spouse (including de facto, opposite and same-sex) children of any age (including step, adopted or ex-nuptial)
- any person(s) financially dependent on the member
- any person(s) in an interdependency relationship with the member (applicable since 1 July 2004)
- a legal personal representative (LPR).
One of the biggest benefits you receive from having a binding death benefit nomination in place is peace of mind. Another advantage of a binding death benefit nomination is the ease and speed with which a death benefit can be paid.
What about non-binding nominations?
A non-binding nomination, on the other hand, gives the trustee discretion to protect the interests of your beneficiaries if circumstances change. For example, if one of your beneficiaries is bankrupt, the trustee can take this into account and avoid putting your super benefit into the hands of creditors instead of your beneficiaries.
To find out how death benefit nominations can be a tax effective strategy for your Estate, contact our office on 02 6701 9100 today.
Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL No 240837. This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. Part of the IOOF group.
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