Binding Nomination of beneficiaries of superannuation policies

Compulsory superannuation has created a new generation of people with superannuation entitlements - young people who have not yet married.

 

Most young people outlive their parents of course, but some do not. Accidents, suicide and drug related deaths do happen.

 

We are often approached by the surviving parents who say that the superannuation company will not release super entitlements without probate (or Letters of Administration in cases where there is no Will). Some parents find the super entitlement is significantly reduced by the cost of getting probate.

 

A much better arrangement is for the super company to hand over the entitlement without probate, and some companies do seem to make allowance for that by letting members nominate those who will benefit from the policy. This is usually done on a "Binding Nomination" form.

 

Any person with a superannuation entitlement can help their next of kin by nominating them as beneficiaries. To give you an idea of what a nomination form includes we include below one of those that we have seen.

Your own super company will probably have a form that differs in detail but which serves the same purpose.

 

Be aware that there has been a lot of controversy in recent years about superannuation companies refusing to do what the Will says about superannuation assets - they say that the superannuation asset in effect belongs to the superannuation company and does not form part of your estate. So if you make a binding nomination that names your husband/wife as your beneficiary, make sure that the superannuation company is going to respect your nomination.  Note also that the binding nomination must be renewed every 3 years or else the trustee of the superannuation fund does not have to honour it.

 

Note also that from October 2010 all superannuation balances under $200 get transferred to the Australian Tax Office. This makes them easier to locate in the future - one solution to the widespread problem of young people changing jobs and leaving small super entitlements behind.

 

We include below one example of a Binding Nomination form from a superannuation company. We don't suggest you use it - your own super company will probably have its own. We include it merely to indicate the sort of information included in a nomination.

 

Binding and Non-binding Dependant Nominations

by: NAME OF MEMBER

The Trust Deed of The XYZ Fund permits you to give a direction (Binding Nomination) to the trustee regarding the distribution of your death benefits.

By not making a Binding Nomination, the trustee will have sole discretion over the manner in which your death benefit is distributed amongst your dependants and legal personal representative (if the trustee is unable to locate any dependants then the benefit is automatically paid to your legal personal representative). You may nominate (Non? Binding Nomination) the persons whom you would like the trustee to consider as possible recipients of your benefit. This does not mean that your death benefit will be distributed in accordance with your nomination, but it will assist the trustee in exercising its discretion.

Your Current Nomination

According to our records the people that you have nominated to receive your death benefit are as follows:

Name of Dependant

% of benefit

Options

1. If you do not want to change your nomination, you do not need do anything.

2. If you wish to amend or replace your existing nomination you must complete Section A if you wish to make a Non? Binding Nomination OR Section B if you wish to make a Binding Nomination.

Definition of Dependant

For the purposes of paying a death benefit, a dependant is:

a person who is financially dependent on you at the date of death; or

a child, adopted child, step? child, ex? nuptial child, de facto spouse, spouse, widow or widower.

You can complete only one Section. If you complete Section A and Section B, the trustee will not recognise Section B.

Section A : Non-Binding Nominations

(do not complete this Section if you complete Section B)

I wish the trustee to have a discretion regarding the distribution of the benefit in the event of my death. Please amend/replace my existing nomination of dependants (see definition above) with the following:

Surname

Given Names

Relationship

% of benefit

Total 100%

Signature Date

Important Notice for Binding Nominations

In order to be effective, a Binding Nomination must be signed by 2 witnesses who are at least 18 years old and who are not named in this nomination form. Also, in order to have effect this form must be delivered to the trustee.

You may only nominate dependants or legal personal representatives.

A Binding Nomination is effective for 3 years after the day it was first signed, or last confirmed or amended by the member. If you wish to confirm your nomination (to avoid it ceasing to have effect after 3 years) you may do so by providing a signed notice to that effect to the trustee.

Your binding nomination will also cease to have effect if you subsequently marry remarry or divorce.

If you wish to amend or revoke your Binding Nomination you may do so by providing a notice to that effect to the trustee witnessed in the same manner as your existing nomination (by two persons over the age of 18 years who are not named in the nomination form). We will provide a form for this purpose upon request.

If a dependant nominated to receive a benefit predeceases the member or if a person nominated below is not a dependant or legal personal representative at the time of death, that person's benefit will be distributed equally amongst the surviving nominated dependants or nominated legal personal representative. If there are no surviving nominated dependants or nominated legal personal representative it will be paid in accordance with the trustee's discretion.

You must provide all details requested in this form. If you do not, the trustee may need to contact you to obtain further information. In the absence of certain information, the rules governing Binding Nominations 'adopted by the trustee provide for the following:

If you fail to specify any proportion, the benefit will be distributed equally amongst those nominated persons who are eligible to receive a benefit. If you do nominate percentages in respect of all nominated persons but the sum of the percentages is other than

100%, the percentages will be adjusted proportionately.

If you specify a proportion in respect of some but not all of the nominated persons the residual amount will be distributed equally amongst those nominated persons in respect of whom no proportion is specified. In the event there is no residual amount, no benefit will be paid to those persons in respect of whom no proportion is specified.

Section B - Binding Nominations

(do not complete this Section if you complete Section A)

I wish to make a Binding Nomination so that the benefit payable in the event of my death will be distributed in accordance with this form.

Surname

Given Names

Relationship

% of benefit

Total 100%

If you want all or part of the benefit to be paid to your estate (and distributed in accordance with your Will), you should write "Legal personal representative" in the column headed "Surname" and write the relevant percentage in the column headed " % of benefit

I direct the trustee of The XYZ Fund to distribute the benefit payable in respect of me in the event of my death in accordance with this form. I confirm that this Binding Nomination completely replaces any previous nomination that I have lodged with the trustee.

Name of Member

Signature of Member

Date

Declaration by witnesses to the Binding Nomination

We, the undersigned, declare that we are at least 18 years of age and that this notice was signed by the Member in our presence.

Name of Witness

Address of Witness

Signature of Witness

Date

Name of Witness 2

Address of Witness 2

Signature of Witness 2

Date