DIVORCE, SUPER & DEATH

Binding Nominations:

The introduction of binding nominations into our Super & Pension Plan means that you can now have certainty about who will receive your superannuation benefit in the event of your death. A valid binding nomination diminishes a trustee's responsibility to determine how your benefits are to be paid.

Prior to the legislation being amended to allow for binding nominations, investors could nominate a beneficiary to receive their benefit upon death, but this nomination did not place any compulsion on a trustee to follow it. The nomination would act only as a guide to the trustee when making a decision about how a benefit would be paid.

The introduction of binding nominations means that trustees can follow the terms of a nomination made by an investor without exercising discretion as long as the binding nominations is valid at the time of the investor's death. In order for a binding nomination to be valid, it must be made and updated every three years in accordance with the legislation, and the persons nominated as beneficiaries must be eligible beneficiaries (either a dependant or the legal personal representative of the investor).

How do I make a binding nomination?

A binding nomination form can be obtained from us at anytime. Contact Don Blackwell or Anne Fatchen.

What if I choose not to make a binding nomination?

If you choose not to make a binding nomination, the trustee, in the event of your death, will exercise its discretion to pay your benefits to one or more of your dependants or to your estate.

Splitting Superannuation on Divorce:

The Government has amended legislation enabling couples to split superannuation benefits upon divorce. When the new law commences into effect on 28th December 2002, superannuation benefits will be treated in the same manner as other joint property and will be able to be divided either by agreement of the couple or by a decision of the Family Court.

The new law will help to overcome current problems that occur when super benefits are a substantial proportion of the matrimonial assets. In the past, the owner of the super (typically a working husband) has been left with the super and little else; while the spouse, with little or no superannuation (typically the non-working wife) has been left with the house, little income and no retirement savings. With the change in law, assets can be divided with consideration to the present and future needs of both parties.

The new legislation permits the super benefit to be divided, either in the accumulation phase (superannuation) or the draw-down phase (pension). Generally, a superannuation fund will establish a new account for the spouse by transferring funds from the existing member's account. The new legislation will, no doubt, be received well by separating couples as it provides greater opportunity to achieve parity between parties.

date of article: 1 December 02

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