The deed establishing a superannuation fund usually provides for money to be paid on the death of a member of the fund. However, the death benefit does not form part of the member’s estate, as it is usually understood.
The inheritance of a superannuation death benefit is not always determined by the member’s will or, in the absence of the will, by the laws governing what happens when someone dies without leaving a will. Rather, the persons who receive the death benefit are governed by the deed establishing the superannuation fund. Commonly, the deed allows a member to decide the persons able to receive the death benefit by means of a nomination – provided those persons are a dependant or the member’s legal personal representative.
From an inheritance perspective, binding nominations provide the greatest certainty. But like a will, a binding nomination has to conform to legal requirements, and if there is a dispute about who should get the benefits, the court deciding the matter will look to see if procedures have been strictly complied with.
In one recent case, a mother’s death benefit of over $250,000 did not go equally to her two daughters as she had indicated in her nomination form because one of the two required witnesses had not properly signed the form before her death. The woman’s husband challenged the faulty nomination and was successful.