What happens to your superannuation when you die?

By LHD Lawyers

While death is an uncomfortable topic it’s important to think about what happens to your superannuation when you are gone.

Our team of lawyers have put together some points that you should take into consideration when deciding what to do with your super and what happens after you pass.

Death Insurance

Many superannuation funds have automatic insurance for Total and Permanent Disablement, Income Protection and Death Cover.

If you hold Death Cover at the time of your passing, then your estate is entitled to claim an additional insurance benefit. This benefit is paid into your superannuation fund and then distributed to your estate with the existing account balance.

It is important to check your superannuation statements to see if you hold this type of cover. Contact LHD today for assistance on making these enquiries.

How do my beneficiaries claim the benefit?

Whether there is additional insurance cover or just an account balance, Death claims can be difficult and emotional.

As a starting point, it is important to know who can contact the fund and who can claim the benefit.

Who can contact the fund?

Only someone authorised to contact the fund can do so. When you pass, the only person who can contact the fund is the executor of your will or an authorised third party. The executor is either appointed by you in your Will or appointed by the court.

LHD can assist the executor of the Will through the process of claiming a death benefit and distributing the superannuation funds.

Who can claim the benefit?

Many people assume that when they leave their superannuation funds to someone in their Will that it is binding on the fund. It is not.  A superannuation fund is a trustee for your money. This means that they can decide who to give your money to when you pass.

The fund will only follow your instructions if you complete a Binding Death Nomination form. As the name implies, this binds the superannuation fund to pay your funds to a designated person/people in the event of your death.

This is separate to a general death nomination. Just telling the fund who you want to leave your funds to is no guarantee.

What happens if I don’t choose a beneficiary?

If you do not have a Binding Death Nomination in place, the fund will decide who to leave your benefit to and in what proportion. They will consider any spouses and children in making this decision.

What happens if I don’t have a will?

If you do not have a Will then the court will need to appoint an administrator through Letters of Administration. The administrator will then be able to make a claim on the superannuation fund.

The superannuation fund will decide how the account balance is distributed, which can often lead to disputes.

What happens if I am not happy with a decision?

Once a superannuation funds makes a decision about how to distribute an estate, they will send a letter explaining it. There is then a period of time, generally 28 days, for anyone to lodge an objection to the distribution.

If you are still not happy with the outcome, a complaint can be raised with the Australian Financial Complaints Authority (AFCA) and then the Federal Court.

Need help?

We understand that dealing with Super Fund legalities can be extremely confusing. Our expert lawyers have vast experience dealing with death claims.  If you need any help, contact LHD on  1800 455 725.

Author: Lisa Meys 


Original Publish Date: March 12, 2017

Last Updated: April 29, 2024

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