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Strategy 9: dealing with public offer superannuation interest

Setting the scene:

  • Jay has $1m in a public offer superannuation fund plus insurance cover for a further $1m.
  • He would like the benefit to be divided between Gloria (60%), Claire (20%) and Mitchell (20%).

Issues for Jay to consider:

Issue Options Comments
Without a binding nomination, the trustee would most likely give much more of the death benefit to Gloria/Manny than Mitchell or Claire

If Jay wants Claire and Mitchell to benefit, he should make a binding nomination or give a binding direction





Consider risk of three-year lapsing rule. For example, if Jay was incapacitated for years before his death

Is a binding direction an option?




Can he make a nomination nominating Gloria, Claire and Mitchell all as beneficiaries 


Yes, as they are all “dependants” as defined under the SISA

However, only Gloria would be a death benefit dependant (for tax purposes) and this may mean tax is payable on that part of the benefit paid to Claire and Mitchell


Consider leaving all super to Gloria and equalising distributions via family trust. Equalisation possible by will, but depends on estate assets being sufficient and also subject to claims – eg by Gloria

Manny would be a dependant (as a financial dependant) – does this give planning opportunities?

What if Jay made a binding nomination but one of the nominees died before him?

It depends on the rules governing the nomination

Important to check with the fund trustee

Assume Gloria had died, could Jay make a new nomination appointing Manny, Claire and Mitchell all as beneficiaries? On Gloria’s death, Manny would cease to be Jay’s stepchild and so would no longer fall within the “child” category in the definition of “dependant” in SISA. Manny may, however, be an SISA dependant if he was financially dependent on Jay
Problems with binding nominations

Jay’s will establishes a testamentary trust for Mitchell because asset protection is important given Mitchell’s occupation as a lawyer

But nominating Mitchell as a beneficiary in a binding nomination exposes Mitchell in the event he is being sued at the time of Jay’s death

What happens if Jay loses capacity?

Has Jay made an enduring power of attorney?

Who has Jay appointed as attorney?

Does he understand his attorney/s may withdraw his money from his superannuation fund prior to his death (or roll it over into another superannuation fund) and this would render any binding nomination useless?

Are pensions an option? Gloria and Manny (until 25 years of age) could receive a pension

Discuss with client

Project and compare financial outcomes