Beware of the death benefit
Planners need to inform their clients of the new superannuation death benefit rules or they could be sued if there is a dispute with the next of kin, a superannuation administrator warns.
Chris Wilson of Super Concepts says the binding death beneficiary nominations rule, introduced as part of the recent SLAB legislation, requires the trustee of the fund to pay any super benefits to the person nominated on the form.
"A planner needs to understand the new rules and identify and advise those clients they feel would be seriously at risk from the changes," he says.
The clients at risk could be a person who has married more than once and has children and assets still linked to a previous spouse, despite nominating their current partner.
"If one of your superannuation clients died today, would they rest in peace when they realise their super money may not automatically be dealt with in accordance with their will?" Wilson asks.
"This could mean the ex-spouse ends up with the lot, or the new children benefit at the expense of the first children."
Wilson says if a family member was so disadvantaged, they may feel so aggrieved that they could resort to the courts to get the money back.
If the planner had not advised their client about the rule change, it could result in them becoming the person being sued to recover the money, as the trustee is covered under the fund's rules.
There could also be tax implications of superannuation benefits going to the nominated estate.
"If the estate has debts, the superannuation could be directed to it and ends up paying them off," Wilson warns.
Planners have to sit down with their clients, look at all the circumstances and ensure the nomination forms comply with the wishes of the client, he says.
"The facts is that many people are unaware of precisely who will get their superannuation death benefits if they died today."
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