Death benefit distribution

The distribution of death benefits under a regulated superannuation fund is generally at the discretion of the trustee, applied in accordance with the terms of the trust deed and subject to the Superannuation Industry (Supervision) Act 1993 (Cth).

The general principle is that benefits from a regulated superannuation fund are paid to a deceased member’s legal personal representative and/or one or more dependants. If no such person can be found after reasonable enquiries, the trustee may distribute the benefits to other persons in accordance with the trust deed.

Who is a dependant?

Dependants of a fund member include:

  • a legally married spouse
  • an oppostite-sex or same-sex de facto spouse
  • the member’s children, including step-, adopted and ex-nuptial children, and any child of a member's (legal or de facto) spouse (this covers children under 18)
  • anyone who was financially dependent on the member at the time of death
  • any person who was in an interdependency relationship with the deceased at the time of death.

What is financial dependency?

Financial dependency is defined to include total and partial financial dependency. Although a trustee must be satisfied that the financial dependency is reasonable and not illusory, relatively small financial support has been found to constitute partial financial dependency for the purpose of superannuation death benefit distributions (see Faull v Superannuation Complaints Tribunal (1999) NSW SC 1137).

Children 18 or over who were not in an interdependancy relationship with the deceased at the time of death must be financially dependent on the deceased to qualify as dependants.

Interdependency

An interdependency relationship includes a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other. Children over 18 may be covered by this.

What is taken into account in distribution?

When distributing superannuation death benefits, a trustee usually takes into account a range of factors including:

  • the claimant’s degree of financial dependency
  • the strength of the claimant’s relationships with the member
  • the claimant’s other entitlements to the member’s estate
  • the claimant’s age, health, employment and financial circumstances
  • the terms of the member’s will
  • any non-binding nominations.

No eligible dependant has an absolute right to a superannuation death benefit.

A trustee properly exercising a discretion may distribute the whole of the death benefit to one dependant over others (see Pope & Ors. v Lawler & Ors (1996) WAG 84).

Death benefit distribution  :  Last Revised: Fri Jul 25th 2014
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