Most superannuation policies provide for benefits payable upon the death of the member of the superannuation fund. If the member has not nominated a specific beneficiary or beneficiaries of the death benefit, the question of who is entitled to be paid the benefit can lead to legal disputation.
Do superannuation death benefits form part of the member’s estate?
Superannuation death benefits can, but do not necessarily, form part of the estate of a deceased member. In many cases, the trustee of a superannuation fund will pay the death benefits directly to the deceased’s spouse or dependents, in which case the benefits will not form part of the estate. In some cases, however, the trustee of a superannuation fund will pay the death benefits to the deceased’s legal personal representative, that is, the executor or administrator of the estate. In that event, the superannuation death benefits will form part of the estate and pass in accordance with the deceased’s will or (if there is no will) according to the intestacy rules under the Succession Act 1981 (Qld), subject to an order of a Court.
How to determine the recipient/s of death benefits
The persons entitled to superannuation death benefits will depend on a number of factors including the terms of the superannuation fund’s trust deed, the applicable legislation and any current valid beneficiary nomination the deceased member has made.
The terms of the trust deed for the member’s superannuation fund should specify the persons who may receive the member’s death benefits. Usually, superannuation death benefits will be paid to the “spouse” and “dependents” of the deceased member or their legal personal representative (the executor or administrator of the estate of the deceased member). These terms are usually defined in the trust deed. Often, the definitions in the Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”) are adopted, although the trust deed should always be checked to ascertain if that is the position for the particular fund under consideration.
Where there is no person entitled to death benefits under the trust deed, the benefits may be paid to a member's legal personal representative. If this is done, the superannuation death benefits will form part of the estate and be dealt with in accordance with the member's will or, if there is no will, in accordance with intestacy rules, subject to any Court order.
Who deals with disputes regarding death benefits?
From 1 November 2018, the Australian Financial Complaints Authority (“AFCA”) replaced the Superannuation Complaints Tribunal (“SCT”) as the statutory body that deals with complaints about decisions of non-self-managed superannuation fund trustees as to the distribution of superannuation death benefits. When reviewing decisions of trustees, AFCA must provide a remedy that is consistent with the fund’s trust deed and it cannot review or alter the distribution of death benefits required by a current and valid binding beneficiary nomination.
To find out more about superannuation death benefits, get in touch with the expert legal team at Preston Law.