Legal Tip 292: How to Leave your Super to a Friend on death

When someone dies their superannuation benefits (death benefits) have to come out of super and can only pass to their estate or their dependants. See

Legal Tip 146: Who can receive your Super when you die? Legal Tip 146: Who can receive your Super when you die?


Therefore, the way to leave your superannuation to someone who is not a dependant is to make sure your super goes into your estate and then make the relevant person a beneficiary under the will. The will could even specify that a particular person is to receive any superannuation that passes into the estate.


But seek legal advice first as there are many other side issues to consider.


Example

Home wants to thank his neighbour Ned for all the equipment he has borrowed over the years and never returned, but Homer wants the wife and kids to get the house and other assets and has decided that Ned can get the super.

Homer makes a binding death benefit nomination to make sure the super is paid into the estate upon his death. He then changes his will so that everything except the super goes to the wife and kids and super goes to Ned.

 

Yes a binding death nomination to a third party will often be rejected by a fund. The person does need to be a SIS Dependant that the trustee is satisfied with. A fatal weakness for many eg girlfriend, recent defacto, ex wife, BFF, same sex partners even.

Recently saw a case where one of three nominated beneficiaries was not eligible. The whole notice was rejected. The trustee then sought to pass the super to the wife contrary to the deceased intentions in a revised nomination that hadnt been lodged. We assisted family by providing details of the deceased advice and instructions just weeks earlier and the trustee accepted that the deceased had intended that the estate NOT benefit as the wife was a second marriage and had independent means and was provided for in the will and if the estate was to benefit from super this would disadvanage the estate planning specifically arranged. She was intended to solely benefit from the lesser estate and not super. The deceased had not actually lodged the completed nomination just prior to death . We had a copy and the original was found at the home. Lawyers provided a copy of the document and the trustee accepted this despite not holding it at the time of death. Took a lot of back and forth and was anxious. The wife was quite agreeable but if she hadnt been it could be complex and slow litigation.