The festive season is the perfect time to ponder the vicissitudes of life and the lives of your children and family members. People with children and extended families are more likely than not to have a Will in place. However, it is a common misconception that young adults without any assets of note don’t need to have a Will or succession plan, especially when they are healthy.

The sad reality of life is that accidents happen, and lives are taken far too soon. And the key asset a young adult is likely to have, even in their 20s, is superannuation. Whilst their superannuation fund balance might be low, it often comes with life insurance (called a “death benefit”) – and that could be a substantial sum of money.

A common misconception is that you can leave your super and death benefit to anyone. That’s actually not the case – superannuation funds have rules about the distribution of death benefits, and cannot honour a nomination of a beneficiary that doesn’t comply with the rules.

Which begs the question: how can you make sure that your super and death benefits (and any other assets you have) are left to the people you want to leave them to?

Still think you don’t need a Will? Read on.

Superannuation is an asset

When you die, the trustee of your superannuation fund must pay out your death benefit, but can ONLY pay it to persons in one or more of the following classes:

1. Your spouse or de facto partner
2. Your child(ren)
3. Your “interdependent” – someone who lives with you and shares a close personal relationship where one or both of you provide financial and domestic support, and personal care of the other
4. Your financial dependent (someone who relies on you financially)
5. Your legal personal representative (LPR).

The LPR is the person in charge of your deceased estate. If you leave a Will, the LPR is the executor named in your Will and the death benefit will be distributed by the executor to the beneficiaries named in your Will. If you die without a Will (intestate), then the LPR will be administrator of your estate appointed by the court and the death benefit will be distributed by that administrator to your next of kin according to a statutory table.

Who is eligible to receive the death benefits?

Superannuation funds allow you to nominate who is to receive your death benefit (this is called a binding death benefit nomination). However, the nominee(s) must be persons in classes1-5 above.

We often see nominations made by young people inadvertently naming their parents or siblings to receive the death benefit. Unfortunately, these nominations are invalid unless the parents or siblings happen to be a member of one of classes 1-5 above. Your superannuation fund is not bound by an invalid nomination.

The easy solution – speak to a solicitor and make a Will and succession plan

In the circumstances outlined above, a person who wants to leave their death benefits to their sibling/parents, can simply speak to a solicitor to prepare:

• a nomination on their superannuation policy that directs the trustee to pay their death benefits to their LPR; and
• a Will that leaves their assets (including death benefits) to their siblings/parent.

If you are over 18 years of age, have no children, partner, interdependent or anyone financially dependent on you then you really should make a Will naming an executor and beneficiary(s) so that your death benefit can be paid to whom you want. Dealing with your death benefit, and your estate, will then be a relatively straight forward matter.

Finally, not having a Will in place means you will leave more complications for your loved ones to deal with at a time when they really just don’t need it.