16th December, 2024
When managing your superannuation, choosing between a lapsing or non-lapsing binding death benefit nomination is crucial for ensuring your beneficiaries are looked after. But what do these terms mean, and how can a law firm specialising in estate planning assist?
What is a Binding Death Benefit Nomination?
A binding death benefit nomination is a legal instruction to your superannuation fund’s trustee, specifying who should receive your super balance upon your death. Nominations can be lapsing or non-lapsing, each with distinct implications for how your death benefit is distributed.
We’ve previously written a blog on binding death benefit nominations that explains the basics of this important estate planning tool.
Lapsing Binding Death Benefit Nomination
A lapsing binding death benefit nomination is typically valid for three years from the date it was signed or last amended. However, this three-year timeframe can vary depending on the superannuation fund’s policies. Once the nomination expires, it automatically becomes a non-binding nomination, which means the trustee has the discretion to decide who receives the benefits.
The advantage of a lapsing nomination is that it gives you the flexibility to review and update your nomination periodically, especially if your circumstances or relationships change. However, the downside is that if you forget to update it, the trustee may distribute the funds to unintended beneficiaries after your death.
Non-Lapsing Binding Death Benefit Nomination
In contrast, a non-lapsing binding death benefit nomination remains in effect indefinitely until you amend or cancel it. This type of nomination provides greater certainty because it ensures that your superannuation benefits will be paid to the people you nominate, without needing regular updates.
While a non-lapsing nomination offers peace of mind, it can be a disadvantage if your relationships or financial situation change over time. The nomination will remain in place until you actively make changes, which could result in outdated or unintended beneficiaries receiving your superannuation.
How a Law Firm Can Help with Estate Planning
Estate planning, including superannuation death benefit nominations, is crucial to ensuring that your wishes are carried out after your passing. A law firm specialising in estate planning can help you understand the implications of both lapsing and non-lapsing nominations. They will ensure that your superannuation is distributed according to your intentions.
Experienced estate planning lawyers can assist you in drafting legally binding death benefit nominations, making sure your beneficiaries are clearly defined and that your nominations comply with current superannuation laws. Whether you opt for a lapsing or non-lapsing nomination, professional legal advice ensures your superannuation is handled correctly.
At Castrikum Adams Legal, our team is here to help you navigate the complexities of superannuation death benefit nominations. We’ll help you decide which type of nomination suits your needs and ensure your estate plan is thorough and current.
Disclaimer: We do not provide financial or tax advice. Please consult a qualified financial adviser or tax professional.
If you would like to dive deeper into related topics, we invite you to check out our other blog posts.