No matter what age you are, or what stage of life you’re currently in, you need to put some serious thought into what will happen to your assets if tragedy strikes.
Young people in particular often feel as though they’re safe from harm, or that their assets are inconsequential enough that nominating a beneficiary is unnecessary.
If you have a superannuation fund, you have assets, and you need to think carefully about who should get that money in the case of your death.
In this story, a young woman tragically died a couple of days after attempting suicide.
Her super fund held a modest balance (around $37,000), but also had life insurance of $228,000.
As there was no will or binding nomination in place, her mum applied to the super fund to have the payment made to her.
But the defacto partner of her daughter challenged the payment with the Superannuation Complaints Tribunal (SCT), who ruled in his favour; as a “spouse” he should receive the money.
Mum didn’t like the partner, there were accusations of abuse and she didn’t believe that they were actually still together at the time of her daughter’s death.
So she took the matter to the Federal Court.
And lost.
The Federal Court agreed with the SCT, finding that even though there were indications that the couple may not have had a stable relationship it was the responsibility of the mother to prove that the relationship had ended, rather than the other way around.
Would she have wanted the money to go to her mum or her partner?
We will never know.
The common misconception is that most young people think that they don’t need to have nominations on their super funds or have a will.
Her assets may have only totalled $37,000, but since the super fund had default insurance it turned a modest balance into $265,000.
What are nominations?
All super funds operate as a trust.
The trustee is in charge and their job is to do what you ask them to do – subject to the rules of the fund and government restrictions – and to act in your best interest.
This includes how you invest, contribute, withdraw etc.
But if you die, the trustee has to decide what to do with your money – and you aren’t there to tell them.
If you have a binding nomination in place, the trustee MUST follow those instructions, but if your nomination is not binding, or there is no nomination at all, the trustee must make a call as to who gets your money.
