Superannuation: Does Super Form Part of Your Pot of Gold?

KEY TAKE OUTS

• Forms, regulations and legislation galore! Did we mention your Superannuation too?
• Does Superannuation automatically form part of your estate on your passing?
  In short, no it does not!
• Meet with us via Zoom for your initial Estate Planning Appointments. If you hope to finalise your Estate Planning by video conference get in quick before potential regulation change end of March 2021.

Forms, regulations and legislation galore! The joys of ensuring that your plan for what happens to your assets, after you pass away is watertight. I love helping my clients achieve peace of mind in knowing their future wishes will be carried out.

We have previously spoken about the importance of having your estate planning in order (See our blog, “Is Your Estate Planning in Order?  – The New Age of Legal Services”), but did you assume that this included absolutely everything you owned? Well, if this was your assumption, you would be correct to a certain extent. However, if your Superannuation is still accumulating or held up in a Super Fund, then it isn’t truly ‘yours’, in the sense that it is not a lump sum in your bank account.

What does this all mean? Upon someone’s passing, their Superannuation does not automatically pass with their Estate. Many people believe that their Superannuation forms part of their ‘big pot of gold’ that is everything they own. Unfortunately, this is not the case. You need to complete what is called a ‘Binding Death Benefit Nomination’ (‘BDBN’). Keep reading to find out more of what this all means for you…

How Does Superannuation Work Upon Passing?

Let’s start at the top. If you are working in Australia, you are most likely accumulating Superannuation in a Superannuation Fund. If this is the case, your Superannuation is therefore held in a Trust. Laws regulate how your Superannuation is held in Trust, as does the Super Fund’s Trust Deed. This may seem a bit murky but it is an important starting note.

“Why doesn’t my Superannuation automatically form part of my Estate?”, I hear you ask. Well, this is because the Trustee of the Superannuation Fund has the discretion to decide who your Superannuation is given to on your passing. Your Superannuation wouldn’t be handed to just anybody, it would go to a spouse, child(ren), financial dependent or ‘legal representative’. To some this may sound fine or completely fair enough. However, to most, they would prefer to choose who benefits from their Superannuation!

Much like drafting a Will, Enduring Power of Attorney and Enduring Guardianship, drafting a BDBN is of key importance to ensure your wishes are met with regards to your Superannuation. I like to think of the BDBN, as a Will specifically for your Superannuation. You wouldn’t appreciate your estranged son or daughter receiving the whole of your worldly possessions, merely due to blood line. Just the same, you wouldn’t want a yet-to-be-divorced spouse to receive all of your Superannuation because it was left to the discretion of the Trustee of the Superannuation Fund to decide who benefits.

As above mentioned, your BDBN should be considered along side your other Estate Planning documents. Each time you reconsider your Will, Enduring Power of Attorney and/or Enduring Guardianship, you should also consider your BDBN.

When Should I Reconsider My Estate Planning?

There are various times in your life that are the light bulb moment which ignites the need for some Estate Planning or updates. Some say they are too young for a Will; others say they don’t own enough assets. However, if you are of legal working age and receiving Superannuation, then there is no better time than the present to ensure your BDBN is sorted so that your Superannuation goes to the person(s) you wish.

It might be time to reconsider your Estate Planning when;

1. Regarding your Superannuation specifically;
   1. Your BDBN may be lapsing or non-lapsing. Many people will need to renew their BDBN every three (3) years. Perhaps speak to a financial planner or invest in a nice diary to remind yourself when your BDBN is about to lapse;
2. You get married! Marriage will revoke your Will and may affect your BDBN too.
   1. Interestingly, if you marry after you appoint an Enduring Guardian then the appointment is revoked. Unless, you marry your Guardian! This may be the case for a de-facto copy for example;
   2. Marriage may bring two families together, with two lots of children;
3. When you reach retirement and lap up some years of R&R;
4. Divorce or separation; and
5. The passing of a spouse.

Please remember the above list is not exhaustive and our Team would be more than happy to assist with your Estate Planning needs.

How Do I Arrange My Estate Planning in the Current Circumstances?

In an earlier blog, we have mentioned that if we are unable to meet with you to finalise your Estate Planning documents, then there was some updates last year that allow for your Estate Planning to be finalised from the comfort of your own home. In April 2020, our office began the process of offering witnessing of Wills, Power of Attorney and Enduring Guardianship documents via video conference (NSW). Unfortunately, time is running out! These regulations may change back on 31 March 2021 which means that we will be unable to witness via video conference.

Our Team have become experts at formally witnessing your Estate Planning documents via video conference and continue to smash the stereotype that all lawyers use difficult to understand language! Our Team is proud to continue to provide the same transparency and empathy that you receive face-to-face, as you do through a computer screen.

Despite the uncertainty and sadness that many people continue to suffer, we are glad to provide greater accessibility to our clients to create peace of mind during this difficult time. Many clients have feared that due to illness, they would not be able to have their documents drafted and finalised. These clients now have peace of mind knowing that the Wills & Estates Team at Coutts is able to assist them in this new age of legal services.

Until Next Time

We hope that this short blog might assist you in making the decision of whether and when to arrange your Estate Planning – especially checking up on your Superannuation BDBN. We know it is easier sometimes to let these things sit on the back burner, but we are now able to breakdown the hurdle of travel! We would love to meet with you via video or telephone to assist you tidy up any loose ends.