02 October 2020
Wills – Superannuation death benefit held on trust
Can I leave a binding nomination of my superannuation benefits to my children on trust until they attain the age of 25 years or must it go absolutely to them at 18?
Thank you for the question.
To achieve this result the binding nomination needs to nominate their legal personal representative. This puts the superannuation proceeds into the estate and then the will can gift it to the children. It is important that the will provides for a superannuation proceeds trust, which is included in all By Lawyers will precedents.
The following is an extract from the By Lawyers Wills commentary:
If the only beneficiaries of a deceased estate who can benefit from a superannuation death benefit are people who were or are tax dependants of the deceased, the executor of the estate is treated as receiving the superannuation death benefit as a tax dependant would have received it – that is, tax free.
However, if one or more of the beneficiaries of a deceased estate who can benefit from a superannuation death benefit are people who were not or are not tax dependants of the deceased, the executor is not treated as receiving the superannuation death benefit as a death benefit dependant would have received it and is liable to 15% tax plus Medicare levy on the taxable portion of the benefits, being all of the concessional contributions and earnings.
In such cases if a deceased wants the superannuation to pass into the estate a 'superannuation proceeds trust' is required to ensure only tax dependants can benefit from the superannuation death benefits so they are not subject to tax.
Regards
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