Navigating the Process of Claiming a Superannuation Death Benefit

Navigating the Process of Claiming a Superannuation Death Benefit

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In Australia, the majority of individuals have a superannuation fund, a financial lifeline that grows with regular contributions from their employers. When the holder of a superannuation fund passes away, their beneficiary is entitled to claim the superannuation Death Benefit, which encompasses the fund's balance along with any additional investments. This article serves as your roadmap through the process of claiming this significant benefit.

Claiming a Superannuation Death Benefit: A Step-by-Step Guide

When a member of a superannuation fund passes away, their beneficiary becomes eligible to receive the entire fund balance, including any supplementary benefits from associated products and services. This payout is commonly referred to as a superannuation Death Benefit.

It's important to recognize that some individuals may have multiple superannuation funds. If you find yourself in the position of claiming a superannuation Death Benefit, it's crucial to contact all the super funds where the deceased held investments.

To initiate the claim for the superannuation Death Benefit, follow these essential steps:
  1. Identify All Superannuation Accounts: Begin by identifying all the superannuation accounts held by the deceased.
  2. Determine Nominated Beneficiaries: Next, determine the nominated beneficiaries for each superannuation fund.
  3. Check for Additional Services: Investigate whether there are additional services within the superannuation fund that can be claimed, such as life insurance.

Beneficiaries of a Super Fund vs. Beneficiaries of an Estate

It's pivotal to comprehend that the superannuation Death Benefit does not constitute part of the deceased's estate. Super funds are owned by trustees, typically a company where the superannuation fund is held, rather than the fund member. Consequently, super funds cannot be bequeathed in a Will. When a member of a super fund passes away, the trustees distribute the member's superannuation in accordance with the terms of their deed. Beneficiaries of the super fund are nominated directly through the fund, not through a Will if one exists. As a result, beneficiaries of the super fund may differ from those of the estate.

Binding and Non-binding Beneficiaries

When dealing with a deceased person's superannuation fund, it's essential to understand the distinction between two types of beneficiaries:
binding and non-binding beneficiaries. Superannuation funds typically permit members to nominate either type of beneficiary.

Binding Beneficiaries: These beneficiaries are nominated in writing to receive the superannuation benefit. They may be dependants or legal representatives, such as the executor of the deceased's estate. If the deceased person nominated binding beneficiaries, they will need to apply for the superannuation Death Benefit. In cases where you believe that the binding beneficiaries are not entitled to the Death Benefit, it's advisable to promptly seek professional advice to assist you in filing a review with the superannuation fund.

Non-binding Beneficiaries: If the deceased person nominated a non-binding beneficiary but did not specify a binding beneficiary, the trustee of the super fund will consider the fund member's relationship with the nominated person at the time of their death. The trustee will then decide whether the Death Benefit will be released to the nominated non-binding beneficiary or a more appropriate dependent.

If a non-binding beneficiary was nominated, the trustee has full discretion to pay the superannuation Death Benefit in one of three ways:
  1. To the nominated non-binding beneficiaries.
  2. To other dependants.
  3. Directly to the deceased estate.

What Happens Next?

The superannuation funds will meticulously review the accounts of the deceased person and any insurance policies held in their name. Following this, they will provide guidance on the required documentation as proof of death, typically a death certificate and Will, to verify your authorization to claim the deceased person's superannuation.

How to Make a Superannuation Death Benefit Claim

To commence a superannuation Death Benefit claim, the beneficiary must make contact with the relevant superannuation funds to inform them of the fund member's passing. The super fund will then outline the procedures for initiating the superannuation Death Benefit payment request and the required documents. Although there may be slight variations among individual superannuation funds, the general process entails the following key steps:

  1. Notify the Superannuation Fund: Inform the superannuation fund of the death and provide a certified copy of the Death Certificate.
  2. Request Beneficiary Details: Seek information about the nominated beneficiaries, fund balances, and any other payable amounts.
  3. Complete Required Forms: Fill out the necessary forms and submit the application for the Death Benefit payment.
  4. Assessment by the Superannuation Fund: The superannuation fund will assess the application, including a review of the deceased's relationships with the beneficiaries.
  5. Outcome Notification: The fund will inform you of the assessment outcome and reveal the designated recipient of the superannuation Death Benefit.
  6. Appeal, if Necessary: If you disagree with the decision, you have the option to request an appeal.
  7. Superannuation Complaints Tribunal (SCT): In cases where disputes remain unresolved, the superannuation fund's final decision may be appealed to the Superannuation Complaints Tribunal (SCT) within 28 days.
  8. Disbursement of the Death Benefit: Once all proceedings are settled, the superannuation fund will disburse the Death Benefit as determined by the process.

Identifying Nominated Beneficiaries

It is of utmost importance to identify the nominated beneficiaries early in the process, as this determination plays a significant role in whether the superannuation payment is considered part of the deceased's estate. If the beneficiary is also the executor, this process is essential for calculating the total value of the Death Benefit, which should then be included in the Inventory of Assets and Liabilities.

Claiming 'Lost Super'

It is prudent to check whether the deceased person had any 'lost super' (unclaimed super). This can be done by completing the Australian Taxation Office's (ATO) Searching for Lost and Unclaimed Super form and mailing it along with certified copies of the death certificate. If available, include the Will, Grant of Probate, or Letter of Administration.

Tax on Superannuation Death Benefits

Superannuation Death Benefits paid to dependants are generally tax-free. However, tax may apply to superannuation Death Benefits paid to the deceased's children aged 18 or above who were not financially dependent at the time of their death. For comprehensive information regarding tax on deceased estates, please refer to our article on How to Lodge a Tax Return for a Deceased Estate."

At Funera.Sydney, we understand the importance of navigating these intricate matters with clarity and compassion. In addition to providing guidance on claiming superannuation Death Benefits, we are here to assist you with affordable burial services and cremations tailored to your preferences and needs.
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