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SHOULD I DO A DEATH BENEFIT NOMINATION (DBN)?

SHOULD I DO A DEATH BENEFIT NOMINATION (DBN)?

Current as of July 2015

 

What is a DBN?

A DBN instructs the Trustee of your self managed super fund (SMSF) or corporate superfund how to pay your super benefits in the event of your death.

Who can I nominate?

Only your dependants are eligible:

  • your current spouse (including de facto and same sex)
  • your children (including step, adopted or ex-nuptial)
  • any person financially dependent on you
  • any person in an interdependent relationship with you
  • your legal personal representative (the executor of your estate)

What happens if I nominate adult children rather than my spouse?

Although adult children can be nominated, they are not classified ”tax dependants” under tax law, and so nominating them may not be tax effective.

What are my options?

  1. Do nothing – the trustee of your superfund will decide whether to pay your benefits to your deceased estate or to your dependents.
  2. Make a death benefit nomination – making a non binding nomination is your opportunity to let your trustee know who you would prefer to take your benefits.
  3. Make a binding death benefit nomination – this obliges the trustee to pay your benefits in amounts and proportions you specify.

Will a binding nomination lapse and require renewal?

Generally, death benefit nominations must be renewed every 3 years. However, the ATO has confirmed that the regulations imposing the 3-year renewal are not applicable to SMSFs.

Can I just let my Will deal with all this?

No. Your superannuation interests are not part of your estate. The trustee of your superannuation fund determines your death benefits.

A death benefit nomination is a very important part of your estate planning requirements, and we suggest that you consider including one as part of your overall estate planning strategy.

It is important that you make the correct choices, and complete the necessary steps to ensure that these choices are legally enforceable.

If you would like to talk about this further or need some guidance, please give us a call.

 

DISCLAIMER
This newsletter has been produced by Stanley & Williamson as a service to its clients and associates. The information contained in the newsletter is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this newsletter, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under Professional Standards legislation. 

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