Superannuation benefits after death – you might be surprised

After death, it is often a surprise that the deceased has a life insurance policy attached to their superannuation.  This can be a considerable amount.

It is also often a surprise to learn that the superannuation benefits (super and life insurance) are not dealt with by the deceased’s will, or if there is no will then, according to the laws of intestacy.

Superannuation benefits are distributed according to a binding nomination. If no binding nomination was made by the deceased, then the benefit is distributed by the superannuation trustee, at their complete discretion.

Generally, only the spouse, children, and dependants of the deceased can receive all or part of the benefit payable and only these persons will be considered by the Trustee as potential beneficiaries.

When deciding who will receive the superannuation benefit the superannuation Trustee should consider:

  • The terms of Trust Deed, and in particular the definition of “defendant”;
  • All potential beneficiaries of the funds are the children, spouses, and dependents of the deceased;
  • The financial circumstances and needs of each potential beneficiary;
  • The nature of the relationship between the deceased and the potential beneficiaries, and any disentitling conduct on behalf of each potential beneficiary. For example, were the deceased and the potential beneficiary in regular contact, or had they been estranged for some time;
  • Any assistance provided by each potential beneficiary to the deceased, for example, care and emotional support;
  • Whether the deceased had a legal obligation to support any of the potential beneficiaries, for example, any biological children under 18 years of age; and
  • The wishes of the deceased, in particular, any nomination made by the deceased and the wishes of the deceased as contained in their will.

That does not mean the superannuation Trustee always makes a wise choice.  But you can appeal their decision.

The procedure to appeal the decision of the Trustee of a superannuation fund is as follows:

  • Request that the Trustee review its decision.  This is an internal process.
  • If you still don’t agree with the Trustee’s decision then you may lodge a complaint with the Superannuation Complaints Tribunal.  The Tribunal is given all of the powers, obligations, and discretions of the Trustee of the superannuation fund.
  • The Superannuation Complaints Tribunal may either affirm the trustee’s decision or substitute its own decision in the place of the Trustee or refer the matter back to the Trustee for further consideration by the Trustee.
  • Finally, an appeal can be lodged with the Federal Court of Australia, but only on a question of law.
  • Strict time limits apply to any appeal and missing the time limit may mean you have no right to a review or appeal.