Life events trigger reminder to update beneficiary nominations

When major life events occur in your life, such as divorce or starting/ending a de facto relationship, updating your nomination of beneficiary for your superannuation fund may not be high on your priority list.

A binding nomination of beneficiary expires three years after the date you sign and date the form. Similar to a Will, a binding nomination becomes invalid when certain changes occur to your family circumstances which result in the nominated beneficiaries ceasing to be dependants. 

When the nomination expires or becomes invalid, it is no longer binding on the trustee and the superannuation fund’s rules often set out how death benefits are to be paid in these circumstances. This may mean that the trustee may pay your death benefit in a way that you did not intend.

Luke and Sarah’s story
Luke and Sarah have been happily married for ten years. Four years ago, Luke decided to make a binding nomination of beneficiary in favour of Sarah. Luke made this decision knowing that his son from his first marriage, who does not keep in contact, would receive a small portion of the death benefit.

Luke leads an active life and, as often happens, he did not make a Will or renew his binding nomination after it expired. When Luke died, the lack of a binding nomination and a Will had significant financial impact on Sarah because the Trustee paid his death benefit to his estate. Under the law of intestacy, Luke’s son received approximately half of the death benefit (rather than a few thousand dollars) from Luke’s estate.