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Upon your passing it is important to understand that your Superannuation and the associated death benefits do not form part of your deceased estate under your Will.
It is dealt with separately (unless you have elected for it to flow through your Estate).
In addition, unless you have done a Binding Death Nomination with your Superannuation Fund (not a standard nomination) then the Trustee holds full discretion as to who the superfunds are paid out to.
This means that they can pay your superannuation and life insurance interests to someone other then who you elected in your standard nomination.
This is the only form of superannuation nomination that is binding on the Trustee of the Superfund meaning that your interests can only be paid to the person YOU elected ( unless you are divorced – which will invalidate the nomination in most cases)
Superannuation and Life Insurance payouts do not form part of your Estate and are in fact taxed differently to other assets on your passing.
If your Superannuation and Life Insurance policy is paid to:
- Your Spouse; or
- Your minor children
There is generally NO tax payable.
However, if you leave your Superannuation benefit to adult children, they will pay tax on the funds. Essentially you are being double taxed!
A good estate plan, will adjust this out across your assets within your Estate and your superannuation to ensure the minimum amount of tax is paid by the Estate and the beneficiaries.
The amount of tax that would be payable is laid out here)