Where will my Super go when I die?

Superannuation is now one of our major assets.  Unfortunately, we frequently find, not enough thought is given to where your superannuation will go upon death.

This is where Binding Death Benefit Nominations (BDBNs) come into play. These nominations are vital for ensuring your superannuation benefits are distributed according to your wishes. But not all binding nominations are the same, and in Australia, you can choose between two main types, binding and non-binding nominations.

What is a Binding Death Benefit Nomination?

A BDBN is a written instruction that directs your superannuation fund trustee to, upon your death, pay your superannuation death benefit to a nominated beneficiary/ies or your estate. It is signed by you in the presence of 2 witnesses.  By making a BDBN, you ensure that your superannuation benefits are paid according to your wishes, rather than being distributed based on the trustee's discretion.

There are two primary types of BDBN: lapsing and non-lapsing. Let's explore each of these in more detail.
A lapsing BDBN is one that expires after a set period.  

Key Factors of Lapsing BDBNs:

• Expiry Period: lapsing nominations have a set period before they lapse, this is often only three years. This means you must update your nomination regularly to ensure it stays in effect.
• Renewal Required: If you do not renew the nomination within the specified period, your nomination will become invalid, and the trustee will have discretion over how your death benefits are distributed.  This could be problematic if you have lost capacity to implement a new one.
• Suitable for Changing Circumstances: Because lapsing BDBNs expire periodically, they can be suitable for individuals whose circumstances change frequently, such as changes in family structure, relationships, or financial plans.

In contrast, a non-lapsing BDBN does not have an expiry date.

Key Factors of Non-Lapsing BDBNs:

• No Expiry Date: Once you make a non-lapsing nomination, it remains in effect until you choose to revoke or to alter it or your relationship status changes. 
• Permanence: Once made, the nomination will stay in place until you take action to change it, providing certainty and stability.
• Less Frequent Updates: With a non-lapsing BDBN, there is no need to renew your nomination every few years, making it simpler for people who have stable family and financial arrangements.

Non-Binding Superannuation Nomination

This nomination is what we consider a “wish” and not a binding direction to the superannuation fund.  The fund will take your wishes into account but does not have to be bound by them if they consider there is a more appropriate person to pay the funds to. The decision is therefore in the hands of the trustee, meaning it may not pass to whom you wish it to go to. 

Conclusion

Whether or not you elect to have a BDBN or non-binding nomination you need to be aware of the consequences of each. Whatever you choose, it is crucial to keep your death benefit nomination up to date to ensure your superannuation benefits go to the people you want it to. 

For more information on BDBN’s contact Contested Will and Estate Lawyers on (07)3544 5900.