Types of beneficiary nominations

You do not have to make a nomination of beneficiaries, but if you choose to do so there are three types to choose from – no additional fees apply. While the Trustee will take into account any non-binding nominations and your current Will when distributing your super, they must follow your instructions if you have a valid binding nomination or reversionary nomination in place when you die.

 

Binding nominations

A valid binding nomination is a legally binding statement to the Trustee outlining how you want your super and any associated insurance payments distributed after you die.

Things to consider about binding nominations:

  • You can nominate as many dependants as you wish, in whatever proportions you like (to a total of 100%)
  • They expire after 3 years and become a non-binding nomination unless you update it – we’ll remind you as it comes close to expiring
  • You must have the form witnessed by two adults who are not named as your beneficiaries
  • It will direct how your money is spent, as long as it was legally valid at the time of your death It may be useful in Estate planning, especially if dealing with dependants from prior relationships
  • When nominating your Estate or legal personal representative, be aware that your super will be part of your ‘deceased estate’ and may then be used to pay down estate debts or remunerate your Executor/legal adviser and may not get the same tax free status as a payment to a financial dependant might
  • Your nomination becomes invalid if you divorce a beneficiary or a beneficiary dies
  • You may be able to better divide your estate in a tax effective manner (eg leave your super to children under 18 and non-super to adult children)
  • A binding nomination will apply to all AvSuper accounts held in your name (unless a reversionary nomination is in place)

If we receive an invalid binding nomination from you, we will let you know it is invalid and consider is as a non-binding nomination until a valid binding nomination is received.

 

 

Non-binding (or preferred) beneficiary nominations

The Trustee will have the final say in how your money is distributed but will take your non-binding beneficiary nomination and/or Will into account in making its decision.

Things to consider about non-binding beneficiary nominations:

  • You can nominate as many dependants as you wish, in whatever proportions you like (to a total of 100%)
  • The Trustee has the final say in how your money is distributed, taking the law and your nomination into consideration
  • The Trustee is required by law to distribute your money to your financial dependants (or interdependants) where these are present, and this may exclude non financial dependants from the distribution
  • It does not expire but you may want to update it periodically such as when you marry, divorce or have children

 

Reversionary nominations (for income stream members only)

If you have an income stream, you can choose to nominate your dependant as a reversionary beneficiary which allows your dependant to receive your money as an income stream or as a lump sum, if you die.

Things to consider about reversionary beneficiaries:

  • It is binding on the Trustee providing it is a valid nomination
  • It applies to your entire income stream
  • It does not need updating unless you want to change it
  • Only one dependant can be nominated
  • It automatically ends if your beneficiary dies or becomes ineligible for an income stream

While all dependants can be nominated it is important to note that to be eligible for an Income Stream rather than a lump sum, when you die your dependant must be one of the following:

  • your spouse
  • your child under 18
  • your child aged 18 to 25 if financially dependent on you (note the remainder will be paid as a lump sum once your child turns 25)
  • your disabled child# (note the remainder will be paid as a lump sum if your child is no longer disabled)
  • a financial dependant
  • someone with an interdependent relationship with you

If you later want to add or change your reversionary beneficiary nomination, you can do so by completing an income stream reversionary beneficiary form.

#As defined by the Disabilities Services Act 1986

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