Usually your super, which includes your account balance and any superannuation death benefits will be paid to your dependents when you die. But not always!
1. What are my super death benefits?
Your superannuation consists of the account balance; that is, the money paid in by you or your employer, any investment earnings and any insurance benefits for death, disability or terminal illness.
2. How do I check what super the deceased had?
Super funds send out annual statements which include the account balance and any insurance you have. The reporting period is usually between September and December each year.
You can check the Lost Super Register at the ATO for any old or inactive super funds.
It is possible that the deceased had multiple funds with more than one insurance benefit to claim.
3. General rule – super death benefits are usually paid to “dependents”
Superannuation death benefits are usually paid to the dependents of the deceased at the discretion of the trustee of the fund.
- legally married spouse;
- de facto spouse;
- children (sometimes limited to under 18);
- financial dependents; or
“Financial dependents” means anyone who was wholly or partly financially dependent on the deceased at the date of death. It can include very small amounts; eg. $30 per week for board.
“Inter-dependents” means 2 people who were in a close personal relationship, lived together and shared household expenses and chores - unless they lived apart because one had a disability; eg. one was hospitalised.
4. Trustee’s discretion
In exercising its discretion, a trustee will look at the extent to which anyone would have been financially dependent on the deceased at the date of death and also into the future.
The trustee will also take into account other factors including:
- how close the deceased was to claimants;
- other superannuation, insurance and compensation benefits payable to any claimants;
- the deceased’s wishes in non-binding nominations or a Will;
- the claimants’ financial income and assets and work; and
- the claimants’ health.
The trustee will weigh up all the factors and decide who gets what portion of the death benefit (if anything).
5. Paying death benefits to the deceased’s estate
If there are no dependents of the deceased at the date of death, the benefit is usually paid to the deceased’s estate.
If the deceased had a valid Will, that will be to the executor of the estate to determine how to distribute the funds.
If the deceased did not have a Will, someone (usually the next-of-kin) will have to apply to be appointed the administrator of the estate and the benefit would then be paid to them to distribute.
The death benefit will be distributed to the beneficiaries as per the Will or probate laws. However, because the money would not be paid directly to dependents, any creditors of the deceased could claim some/all of the benefit before it can be distributed to anyone else.
A small number of super funds specify that the full benefit must be paid to the estate and not directly to any dependents.
6. Binding death benefit nominations
A binding death benefit nomination is a direction by the member to the super fund trustee to pay the death benefit to dependents or to his/her estate in set proportions or amounts.
If the deceased had a valid binding nomination in place at the date of death, the trustee must pay the death benefit according to that nomination. They have no discretion.
To be valid, a nomination must be signed and witnessed in the same way as a Will and the nominees must be dependents at the date of death. If a member wants some/all of their superannuation to go to someone else (eg. a charity), the member must nominate their estate to receive the funds and have an up-to-date Will leaving money, for example, the chosen charity.
7. Claiming death benefits and/or super account balance from the deceased’s super fund
Steps to take:
- Check the deceased’s records, the ATO Lost Super Register and the last employer for all their super funds.
- Check any insurance benefits; death, terminal illness or TPD insurance.
- Lodge claim(s) with the fund(s).
- Include evidence of your relationship and financial dependency.
- Check for competing claims.
If you require assistance in relation to death benefits or super account distributions after the death of a loved one, or any other superannuation insurance issue, feel free to get in touch directly with today’s blog writer, John Berrill.