It’s an extremely difficult time when a loved one dies and stressing about what happens with their super can add to the pressure you’re already facing. Having an idea of what the process entails may help you be more prepared.
When a person dies, Australian super law says their remaining super is to be paid to their spouse or dependents unless they have nominated an alternative beneficiary. But, you may also need to know how to claim superannuation after a loved one’s death. Let’s start with the basics.
What is superannuation?
In Australia, superannuation is a mandatory payment made by an employer for their employee. Over the entire tenure of your employment, this money is collected in a super fund that can be used when you leave the employment, due to retirement or a health condition that doesn’t permit you to work.
Some super funds contain several hundred thousand dollars when someone dies, especially if they are still employed at the time of their passing. As a super is not part of your will, it’s recommended to always specify a beneficiary for your super to ensure the money is given to the person or people you wish to receive it.
Why is super not part of the will?
Super is held in a separate fund to your other assets and is controlled by a trustee. It’s governed by separate laws from wills and estates.
What is a beneficiary in superannuation?
As the name suggests, a superannuation beneficiary is a person who can receive any proceeds or benefits from your super account after you die. Basically, by nominating a beneficiary, you’re clearly telling the super fund who should receive your funds after your death.
Who is eligible to become a beneficiary?
You can nominate one or more people in your life who are eligible to claim superannuation after your death. However, your beneficiary must match certain criteria, which includes:
- Your spouse, this includes de facto and same-sex partners. Former spouses cannot be nominated.
- Your children, regardless of their age.
- A person who is financially dependent on you at the time of your death.
You could also nominate your estate or legal personal representative as you can then specify in your will how and to whom you want to distribute your super money. This allows you to give your super money to other people in your life who don’t meet the eligibility criteria mentioned above.
But, if you’re nominating your representative, it’s crucial to ensure that your will is up-to-date to allow your representative to pay out your super money as per your instructions.
What are the steps to claiming deceased superannuation?
As the next of kin of a super member who has recently died, you can contact the deceased's super fund to determine if you’re eligible to receive the money. Most super funds have certain steps that you need to follow while claiming a deceased’s superannuation, which includes:
- Contacting the super fund and explaining your identity and relation to the deceased.
- The super fund will assign a case manager who will ask some basic questions to determine your eligibility to the death benefits.
- If your claim is considered eligible, the case manager will send you a couple of forms to fill out and request the copy of any other documents that can help strengthen your claim.
- At this stage, a trustee is involved, who will review your claim and determine if the deceased had nominated a beneficiary.
- Based on this analysis, a decision is made about who will receive the death benefits. At this point, all the people who made a claim are notified. You have 28 days to object or contest the decision.
- Once all the objections have been settled, the payment of the deceased superannuation is released to the beneficiaries.