Tips on super to work beyond ones lifetime
Superannuation is not just about financing your own retirement, it can also provide lasting benefits to your loved ones beyond a lifetime, according to Australian Executor Trustees .
The new-look superannuation landscape post July 1, 2007 has major implications for those receiving death benefit payments.
Australian Executor Trustees warns that unless specific instructions are made regarding death benefit payments, the money may not be distributed exactly as originally intended. The substantial amount of money paid by your superannuation fund after you pass on could really make a difference to your loved ones.
It is important that the right advice is sought and strategies put in place to ensure that the money is directed exactly as intended. And it provides maximum future benefit to your beneficiaries.
There are some important rule changes people need to be aware of when considering the future distribution of their estate. From July 1, 2007, non-dependants of a deceased person will no longer be able to receive the deceased person’s death benefit as an income stream.
Instead non-dependants must be paid as a lump sum and the taxable component of this payment will be taxed at 15%. Dependants, on the other hand, will be able to receive the death benefit payment either as an income stream taxed at different rates depending on the dependant’s age, or as a tax-free lump sum.
It was important to be aware that although you may have a Will in place, it does not always cover your superannuation.
So unless you are a member of a DIY superannuation fund where you can specifically nominate a beneficiary, how and to whom your death benefit will be distributed in employee type funds may be decided by the trustee of your super fund.
Death benefit nominations are the only way to formally advise the super fund trustee how you want your death benefit to be distributed.
There are two types of death benefit nominations – non-binding and binding.
A non-binding death benefit nomination simply advises the super fund’s trustee that you wish your death benefit to be paid in a certain way. But the trustee of the fund is not bound by your expression of wish and he can still decide not to fulfil your request.
The only way to make sure the money is distributed exactly as you intended is to have a current binding death benefit nomination in place. A binding nomination can be used to either appoint your estate as a beneficiary or nominate individuals who are known as -superannuation dependants.
This can reduce the likelihood of disgruntled beneficiaries or creditors making claims against your estate and causing your family even more distress at an already distressing time.
Binding death benefit nominations, however, are only valid for three years, so it is important to renew them just as regularly. Superannuation dependants are restricted to a spouse, a child of any age, a person where an interdependency relationship exists or someone who is actually dependent on you.
4-Jun-2007