Everyone Needs to Have a Will
Many young people think they do not need a Will because they have hardly any assets and generally live from pay to pay.
However, in many cases they forget they have life insurance within their superannuation. This could be several hundred thousand dollars.
If they do not have a Will then who will this money go to?
The Superannuation Industry (Supervision) Act 1993 states that the trustee of a superannuation fund must pay superannuation death benefits to either a dependant of the deceased or their estate.
The simplest solution is to put in place a Binding Death Benefit Nomination which will force the trustee of your superannuation fund to pay your benefits in the way you want.
However, in many cases no nomination has been made or the nomination has lapsed. Currently, Binding Death Benefit Nominations lapse after three years if they are not renewed.
So what happens if there is no nomination? If someone can establish they were dependant on the deceased then they will receive all the superannuation benefits. This can be a complicated exercise and can take many months before the trustee of the superannuation fund pays out the death benefit.
However, if there is no one dependant on the deceased then the trustee of the superannuation fund will pay the benefit to the estate.
However, if there is no Will then the laws of intestacy will apply and the Succession Act 2006 will apply to pay the benefit.
Recently we were involved in a very difficult case where a young man died without a Will. He had no assets other than a few hundred dollars in his bank account and a small superannuation balance. He also had a credit card debt which was significantly higher than the amount of funds in his account. However, there was a life insurance component of $400,000 in his superannuation.
We met with the mother of the deceased who was understandably distraught after losing her son.
We explained that as her son did not have a Will, the trustee of his superannuation fund would pay the $400,000 to her son’s estate if he had no dependents. As the son did not have a partner or children the trustee would pay the money to his estate.
We explained that in this case she would receive $200,000 and her former husband would also receive $200,000.
“That is not fair” she said. “My son’s father walked out on us when my son was 12 months old and has not seen his son since”.
We agreed it was not fair. However, we had to explain to her that this was what would happen as her son did not have a Will.
This is a very sad and unfair example, and something we will talk about for the rest of our careers.
The solution is to ensure that everyone, including young people, have a Will.