Superannuation Agreement

A superannuation agreement is an agreement about how, in the event of a marriage breakdown, superannuation interests are to be split.  A superannuation agreement is like a financial agreement, but given that superannuation interests are held in trust, there are special rules about what a superannuation agreement has to include.

Provided that a superannuation agreement complies with the legal requirements detailed in the superannuation splitting laws, the agreement is binding. If a superannuation agreement is binding, then:

• The trustee of a superannuation fund is required by law to implement its terms; and
• The court is not able to make an order about the superannuation interest that is dealt with in the superannuation agreement.

If the separating parties are unable to agree, then:

• The court has the power to make an order, as part of a property settlement, about how any superannuation interests are to be split; and
• The court order is binding on the trustee of a superannuation fund, who must comply with it, provided that the legal requirements have been met.

When to make a superannuation agreement?

You are able to enter into a superannuation agreement:

1. Before you marry
2. During marriage or
3. After separation.

More information

For more information on this topic, contact our experienced family lawyer,  Mark Orchard:
Phone:  07 4639 0358
Email: morchard@cp484.ezyreg.com

PDF:  Superannuation – splitting the pot post a separation

Superannuation Trust Deed

Superannuation balances (which often include significant life insurance) are held by your super fund trustees on your behalf under the terms of a superannuation trust deed. Under the terms of most superannuation trust deeds, when you die, the trustees of your fund decide how your superannuation will be dealt with.

Self-managed superfunds (SMSF)

In the case of a self-managed super fund, when you die, someone will take your place as trustee of your fund, or if you have a corporate trustee, someone will take control of the corporate trustee. That person may be the legal personal representative of your estate, or may be someone nominated in the trust deed.

As a general rule, the trustee of your SMSF has absolute discretion to decide who among your dependants receives your superannuation benefits upon your death.

Nominating a beneficiary

By keeping your nomination(s) up to date you can make sure that the right people receive your benefit.
There are a number of nomination options. The right one for you will depend on your specific circumstances. Some of these options are:

Binding Death Benefit Nomination (BDBN)
A BDBN allows you to specify who your superannuation is to be paid to when you die, and removes the discretion of the trustee to make that decision. If you don’t have a BDBN, the trustee for your super fund usually has the right to decide who receives your superannuation death benefits.
A BDBN must be executed in the presence of two independent witnesses and should be renewed every 3 years.

Non-Binding Death Benefit Nomination
A non-binding nomination allows you to state your wish as to who should receive tour super, whilst giving the trustee the flexibility to determine the best way of distributing the funds at that time of your death, taking into account issues such as the most tax effective method of dealing with the money.
Non-binding nominations do not expire, but still should be reviewed along with your will on a regular basis.

‘Hard Wired’ Clause
A ‘hard wired’ clause can be written in the trust deed of your SMSF, stating who the superannuation benefits are to be paid to when you die.

A ‘hard wired’ clause is binding, and can be tailored to suit specific requirements, such as covering how the superannuation death benefit must be paid, who is to succeed to the role of trustee and what investments must be maintained within the SMSF.

A ‘hard wired’ clause has many advantages, but it does require the expertise of an experienced wills and estate planning lawyer to ensure it is done properly.

Who can I leave my Super to?

You are restricted as to who you can nominate to receive your super. It may only be paid to your spouse (including a de facto spouse), your children, or someone with whom you have an interdependency relationship*, or your estate. If it is paid to your estate, it will be distributed in accordance with your Will.

*An interdependency relationship applies where two people have a “close personal relationship”, live together even if they are not related by family, one or each of them provides the other with financial support and and domestic support and personal care.

It also applies if the two people have a “close personal relationship” and the only reason they don’t satisfy the remaining conditions above is because either or both of them suffer from a physical, intellectual or psychiatric disability.

More information

For more information relating to superannuation death benefits, wills or estate planning in general, feel free to contact our experienced Wills and Estate Planning lawyers.

David Whitehill
Phone: 07 3210 6500
Email: dwhitehill@cp484.ezyreg.com

Glen McCracken
Phone: 07 4639 0307
Email: gmccracken@cp484.ezyreg.com

PDF: What happens to my super when I die?