How beneficiaries work
Your loved one may have nominated a beneficiary to receive the death benefit. A beneficiary nomination can help a super fund trustee decide who to release the death benefit to. But depending on the type of beneficiary nomination your loved one made will impact whether their nomination is a guide or legally binding on the trustee.
Under the superannuation rules, death benefits are generally paid to one or more of the deceased member’s dependants (or their estate), the trustee will determine who will receive the death benefit unless you nominate a valid binding beneficiary nomination.
What happens if you are the beneficiary of someone else's super?
In this scenario, the deceased’s super fund will reach out to you if you are the nominated beneficiary for the deceased (if you don't reach out first). They will usually give you a choice of receiving your loved one’s death benefit as a lump sum or pension (income stream):
- If received as a lump sum, tax may be payable if you are not a dependant for tax purposes. Learn more
- If received as an income stream, any tax payable will depend on the age of both the deceased and the recipient.
Tax rules for death benefits
While nominating beneficiaries are bound under superannuation law, payouts to nominated beneficiaries are guided by the Australian Tax Office (ATO).
Tax laws around death benefits are very different depending on your age, your relationship to the deceased, how you accept the payout and how the deceased was having their super paid to them. If you are facing a current query or concern, you can find more information from the ATO website.
Alternatively, if you are a Rest member, one of our Rest Advisers can help you navigate any tax complexities or questions.
If you're facing the death of a loved one or have come into a sum of money, navigating the tax implications and regulations can be complex. It might be a good idea to discuss your options with a Rest Adviser to work out the best plan for you.
