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Superannuation & Deceased Will

On a person’s death, their superannuation benefits can only be paid directly to one or more ‘dependants’ as defined for superannuation purposes, unless they are paid to the deceased’s legal personal representative to be distributed in accordance with the deceased’s Will.

Super paid after a person’s death is called a ‘super death benefit’.

If the rules of your super fund allow it, you can nominate the beneficiary for your super, by making a non-binding or binding nomination.

If the super fund rules allow a binding death benefit nomination, you can nominate one or more dependants and/or your legal personal representative to receive your super. This will ensure your super is distributed according to your will. Contact your super fund to find out more about death benefit nominations.

Who is a dependant?

Superannuation law sets out who a death benefit is payable to, while taxation law sets out how a death benefit is taxed.

For the purposes of deciding who receives a death benefit, you’re a dependant of the deceased if at the time of their death you were:

  • their spouse or de facto spouse
  • a child of the deceased (any age)
  • a person in an interdependency relationship with the deceased.

An interdependency relationship exists between two people if all of the following conditions are met:

  • they have a close personal relationship
  • they live together
  • one or both provides the other with financial support
  • one or both provides the other with domestic support and personal care.

However, for tax purposes, a ‘dependant’ (or ‘death benefits dependant’) of the deceased comprises (a) their spouse or former spouse (including de facto spouse), (b) their child under the age of 18, (c) a person in an ‘interdependency relationship’ as defined with the deceased, and (d) a person who was financially dependent on the deceased.

Therefore, while a former spouse is a dependant for tax purposes, they are not a dependant for superannuation purposes, and so super death benefits generally cannot be paid directly to a former spouse.

Also, while a child of any age is a dependant for super purposes, only children under the age of 18 are dependants for tax purposes. This means that while a child of any age may receive super death benefits directly, those benefits will generally only be tax-free if the child is under 18.

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