Why Michael’s family missed out on his super

Super – and the insurance attached to it – isn’t automatically included in your will. Make sure your money goes to the right people, writes Nigel Bowen

In summary

    • Michael had a will, but a simple mistake severely cost his family
    • Wills don’t automatically include your super and its life insurance
    • Nominate a beneficiary to ensure your money goes where you want

In 2015, Michael Rafferty* collapsed and died while surfing with friends. What was already a tragedy became even more distressing when the court ruled for most of the $375,000 in his super — a combination of retirement savings and insurance — to go to a woman his family claims he’d only recently started a relationship with. This left his two young children with less than a quarter of his estate.

Michael had a valid will, but what his family didn’t know was that little consideration would be given to his written will when determining how the $375,000 held in his superannuation account would be divided.

This is because your super – and its insurance – are not part of your will.

Your super money is held in trust

“Rather than being an asset you can bequeath to whomever you choose, the money you have in super is held in trust,” explains Brian Hor, a superannuation and estate planning specialist at Townsends Business & Corporate Lawyers.

Based on current superannuation rules and legislation “if you don’t have a binding [beneficiary] nomination, the trustees of your super fund need to decide who gets your super balance and any associated insurance payouts.”

Had Michael nominated a beneficiary on his super account, a very different outcome could have occurred.

Why your superannuation is more valuable than you realise

Most people have insurance coverage within their super account. Even if you don’t have a huge super balance there can be a big insurance payout if something unexpected happens.
“Many people do not realise that their superannuation is treated differently to their other assets when they die,” says Pauline Vamos, former CEO of The Association of Superannuation Funds of Australia (ASFA). This is because your super is held in trust. “However, often it will be one of the biggest assets they are able to pass on.”

Your super needs its own ‘little will’

Your super fund wants to respect your wishes. But you need to make it clear what those wishes are.

“That’s why you need a separate document to your will” says Hor. “It’s like a little will to decide who gets your superannuation.” This is where a binding non-lapsing beneficiary nomination comes in. It is a legal document, that informs the trustee who you nominate as your beneficiaries and how you want your money divided. ANZ Smart Choice Super makes it easy by providing this as an online form.

Hor concludes “that is a tiny investment of time and energy to ensure your loved ones are provided for.”
Follow these simple steps to nominate your beneficiary with ANZ Smart Choice Super:

How to nominate a beneficiary (1:00 mins)

*Based on a personal story. Names and details have been changed to protect identity.