It’s a scary thought, but tick the wrong box on a simple form and your loved ones could end up paying tax or losing valuable government benefits. Few of us understand exactly what happens to our superannuation funds when we die. In many cases it is the biggest liquid asset we have.
Even modest balances can be increased dramatically when life insurance proceeds are added to the fund after death. In an instant, a few thousand dollars could become several hundred thousand. It may come as a surprise but a taxed superannuation fund does not normally form part of your estate.
That means the instructions in your will don’t usually apply to your retirement savings. Journalism for the curious Australian across politics, business, culture and opinion. Superannuation funds are held in a type of trust.
The trust’s primary purpose is to provide for your retirement, but in the event you don’t make it to retirement the money is then available to your dependents. If you leave no instructions to the trustees of your fund, they are legally required to distribute the proceeds to your dependents following strict superannuation rules. Sometimes the rules might not reflect your wishes and, in many cases, the wishes of your loved ones.
Nick Bruining Nick Bruining Many superannuation fund complaints are over how a super fund distributes the death benefits to dependents. The simplest way to avoid this problem is to give the fund trustees explicit instructions about who gets what. The most sec.
