16th January, 2025
When planning your superannuation, it’s important to understand who can legally receive your super benefits when you pass away. While you may wish to leave your super to anyone, such as a sibling, the law surrounding superannuation death benefits is quite specific. Importantly, a sibling cannot automatically be a super beneficiary unless they meet certain criteria.
Understanding Superannuation Death Benefits
When someone passes away, their superannuation balance doesn’t just disappear. If you’ve made a valid nomination, your super fund will distribute your super to the nominated beneficiary. In the case where there’s no nomination, or if you’ve made a non-binding nomination, the trustee of the super fund has the discretion to decide who will receive the funds.
To prevent confusion, ensure you’ve made a binding death benefit nomination, which clearly states who should receive your super balance. For more information on the importance of non-binding vs. binding death benefit nominations, feel free to check out our detailed blog on the topic here.
Who Can Receive Your Superannuation Death Benefit?
Under superannuation law, the term ‘dependant’ is crucial in determining who can receive your super death benefit. These dependants include:
- Your spouse or de facto partner, regardless of sex.
- Your children, of any age.
- Someone in an interdependent relationship with you.
Why Can’t a Sibling Be Your Super Beneficiary?
A sibling doesn’t automatically qualify as a dependant under superannuation law, unless they meet the criteria for an interdependency relationship. For example, if you and your sibling live together, provide mutual financial and personal support, and share domestic responsibilities, you may have an interdependency relationship. However, in most cases, this relationship may not exist. Therefore, a sibling cannot typically be a super beneficiary unless they are considered a dependant due to exceptional circumstances.
What Happens If You Want Your Sibling to Receive Your Super?
If you wish to leave your super to someone who is not a recognised dependant (such as a sibling), you must arrange a binding death benefit nomination with your legal personal representative (usually your executor). This allows the super to be paid to your estate and distributed according to your Will.
However, there are tax implications for death benefits paid to non-dependants. These benefits are generally paid as a lump sum and may attract different tax rates compared to payments made to a dependant. Understanding these tax consequences is critical, especially if you’re considering leaving your super to someone outside the recognised categories. We recommend consulting an accountant or tax professional to fully understand the tax implications.
If you’re unsure whether your sibling can receive your super, or if you need help with death benefit nominations, it’s always wise to consult a professional.
At Castrikum Adams Legal, we specialise in superannuation law and can guide you through the complexities of death benefit nominations, ensuring your super is distributed according to your wishes. Contact us today for expert advice tailored to your specific needs.
If you would like to dive deeper into related topics, we invite you to check out our other blog posts.