Blog

In Australian superannuation, death benefit nominations determine how your superannuation balance is distributed upon your death. Understanding the difference between binding and non-binding nominations is crucial for ensuring your wishes are honored.

Non-binding nominations aren’t legally binding the way that binding nominations are, but they are easier to complete and you have more options when choosing who to nominate as your beneficiaries, which is why many people choose the non-binding option. Read on for the differences between each type of nomination.

Binding Death Benefit Nominations

– Legal Status: Binding nominations are legally enforceable, meaning the super fund must distribute the benefits according to your nomination.
– Control: You have direct control over who receives your super balance, ensuring your wishes are honored without trustee discretion.
– Requirements: These nominations need to be updated every three years to remain valid, and they must comply with legal requirements, including being signed and witnessed.
– Flexibility: While binding nominations provide certainty, they are less flexible, as you can only nominate a dependent or legal representative.

Non-Binding Death Benefit Nominations

– Legal Status: Non-binding nominations are advisory only; the super fund trustees have the final say in distributing benefits.
– Control: While you can express your preferences, the trustees can consider other factors (like relationships or financial needs) when making their decision.
– Requirements: There’s no need to renew these nominations periodically, which adds flexibility but can lead to uncertainty about your wishes being honored.
– Flexibility: Allows for more options in beneficiaries, so trustees can adapt to changing circumstances and family dynamics.

What if you just include super in your will?

Death benefit nominations for superannuation are not included in your will because superannuation is considered a separate legal entity governed by specific laws. The super fund has its own rules about how benefits are distributed, and these nominations dictate the distribution independent of your will.

Key Considerations

Choosing between binding and non-binding nominations involves weighing the importance of control against flexibility. It’s advisable to regularly review your nomination based on life changes and consult with a financial advisor for the ultimate decision that aligns with your goals.