Maintaining a current death benefit nomination with your Superfund
Last week I had an “unusual” success in a matter relating to a decision by the Trustee of an industry superfund. Around three months ago, I met a lady who lost her young son in a road accident. The son was employed in the retail industry and regularly contributed to his superannuation fund. The superannuation fund advised my client (the mother) to lodge a death benefit claim form. Her late son had not left a death benefit nomination for the superannuation monies and insurance benefits and the Trustee had to make a decision as to whom to pay these monies.
Around three months after lodging the death claim form, my client received the Trustee’s decision that the superannuation monies and insurance benefits were to be paid to “a person” titled as his de-facto. My client was completely unaware of this person and asked me to assist her in objecting to the Trustee’s decision.
This article re-emphasises employed individuals to periodically review their circumstances and maintain a current death benefit nomination with their superfund at all times. This will avoid your family experiencing the anguish, legal costs and uncertainty around receiving superannuation monies and insurance benefits. We provide independent legal advice regarding matters associated with industry super fund, self-managed superfund, death benefit nominations and allied areas.
Superannuation monies
Superannuation is a tax effective way to save for your retirement. In general, you will not be able to access this money until you retire. Your employer contributes to your super fund and you can top it up with your own money.
When you pass away, superannuation does not automatically form part of your estate (a pool of the deceased person’s assets and liabilities). Superannuation monies are held in a trust and are treated differently from your other assets. Unless you have taken steps in advance to instruct the Trustee to distribute the death benefits according to your wishes, the Trustee has the discretion (subject to the relevant legislation) in making a decision how to divide it amongst your dependants.
You can nominate your beneficiaries by providing the Trustee a completed binding death benefit nomination form. Every member of a superannuation fund is expected to provide a binding death benefit nomination, which is generally valid for approximately 2 to 3 years. This document directs the superfund’s Trustee to pay your death benefit to the eligible beneficiary of your choice.
The journey ahead
I submitted a letter of objection and supporting documents to the Trustee and raised the following matters:
my client was granted letters of administration by the Supreme Court WA to administer her late son’s estate;
the deceased and my client shared an “interdependency relationship”;
the person titled as de-facto was a girlfriend, which cannot be equated to a de-facto relationship; and
the product disclosure statement published by the superfund set out that, in the absence of a death benefit nomination, the Trustee must pay the benefits to the legal personal representative of the deceased member.
I asked the Trustee to provide me with the information and documents they relied upon in making the decision that the “person” was a de facto entitled to receive and superannuation monies and insurance benefits.
An interdependency relationship exists if:
two persons share a close relationship;
they live together; and
one or each of them provides the other with financial support, domestic support and personal care.
Further, a person is recognised as “de facto” if:
he/she has lived with the deceased for a required period of at least two years;
had a commitment to have a shared life with the deceased; and
had an interdependency relationship with the deceased.
In support of the matters raised in the letter of objection, I provided the Trustee with my client’s bank statements, telephone messages exchanged with her late son, her late son’s medical bills that she paid and photographs evincing that her late son had a close relationship with her, lived with her and was financially dependent on her.
Happy ending
Nearly two months after submitting my client’s letter of objection and documents, the Trustee advised us that it had made a decision to pay the entire amount of superannuation monies and insurance benefits to my client as the legal personal representative of her late son’s estate.
Fortunately, my client could provide significant evidence in support of the matters raised in the letter of objection to receive an “unusual” positive outcome. Despite being entitled to receive superannuation monies, many families may not have substantial evidence in support of their claim for such monies leaving them with limited options. In hindsight, my client would not be required to go through the anguish and uncertainty around receiving superannuation monies and insurance benefits if her late son would have had a death benefit nomination in place with his superannuation fund.
Takeaway message
Trustees of industry superfund work for a profit, not for charity. We can help you negotiate your way through the legal complexities associated with death benefit nominations with industry superfund, self-managed superfund so you control what happens of your monies after you pass. Your family would thank you for it!