Prepare for a future beyond you
My life-changing accident reinforced the need to have a plan for my financial affairs should I not have survived.
By John Wasiliev - 3 min 40 secs read
A little about John
John Wasiliev writes on personal finance specialising in superannuation and self managed super funds, managed funds and trusts.
Recently I passed a milestone in my life that I may not have if luck had not been on my side. It was the seventh anniversary of my survival of a life-changing motor vehicle accident that left me in a wheelchair.
While this totally changed my life, I consider myself lucky because the initial medical expectation after the accident was that I would likely not survive the hour-long emergency helicopter flight that rushed me to hospital. To put it bluntly, I was expected to die within an hour of the accident.
But thanks to the medical treatment I received, I did survive and since then have been fortunate enough to be able to continue my life as a personal finance writer, as well as a husband, father and grandfather.
What the experience highlighted to me—as well as to those around me—was not only that I do like being alive but also that our death is something we can’t predict.
One aspect that my seven-month stint recovering in hospital brought home was the need to have a plan in place to deal with my financial affairs should I not have survived. Fortunately, I did have one.
When we do die, if we have made the effort of saving for our retirement, we may leave quite a valuable asset behind in the form of a superannuation death benefit. That’s in addition to other assets we might have accumulated during our lifetime.
As far as organising our financial affairs are concerned, there are two ways of doing this: an easy way and a hard way.
The easy way
If we prepare properly, we will have what is known as a binding death benefit nomination ( on our website or on the Nationwide Super website) that details how we want our superannuation to be dealt with should we die. For our other assets, we will have prepared a will that clearly outlines how we’d like our possessions and assets divided. In my case, I have nominated my wife as my superannuation beneficiary.
The hard way
The hard way is to not have a death benefit nomination or a will. A surprisingly large number of us don’t have a will—estimates from various government and university studies suggest that it’s as many as three or four in 10 people.
In superannuation, a binding death-benefit nomination is a set of instructions a member gives their fund that directs where they would like any super that remains on their death to go. It’s the superannuation equivalent of a will and can be quite controversial if it isn’t correctly prepared and regularly updated should your circumstances change.
One positive aspect of belonging to an established super fund is that their trustees will often encourage you to nominate a beneficiary who will receive your super when you die. It is important to prepare such directions while you are still ‘on the ball’ and able to carefully consider what you want to happen.
Need to know
When preparing nominations, there are some interesting aspects everyone should be aware of.
- Both individual beneficiaries and your estate (i.e., legal personal representative) can have super paid directly to them from your fund.
- For your beneficiary to inherit your super in the most effective way, they must be financially dependent on you. Effectively this means they are allowed to receive your super with tax concessions with the best concession being that they can inherit all your super tax free.
Definition of a dependant
The most obvious financial dependant is your spouse or partner, which can include a de facto or a same sex partner.
Children under 18 are automatically dependants and so are adult children who are financially dependent on their parents for health or medical reasons.
Arguably the least understood category of potential dependants in a binding death nomination is anyone who comes under the definition of having an ‘interdependency relationship’ with you.
Such a relationship occurs between two people where they have a close personal relationship, and they live together. I’ve known people in this situation who weren’t aware that this right existed.
While one or each of them can provide the other with financial support, of equal importance is that one or each of them provides the other with domestic support and personal care. Other factors such as the duration the relationship exists plus the ownership, use and acquisition of any property shared by those in the relationship put more ‘meat on the bones’ of an interdependency relationship.
How much mutual and emotional commitment there is to a shared life is another consideration, as well as how the relationship is presented publicly, especially any evidence that suggests the parties intend the relationship to be permanent and not just one of mere convenience.
Interdependency is a relationship that goes beyond one that exists between friends and flatmates that is not consistent with the support and care necessary for a ‘close personal relationship’.
The only certainty when it comes to death is that it will happen. The best we can do is to have an up-to-date binding death benefit nomination and a legal will to ensure our assets are distributed as we wish when the inevitable eventually occurs.
The views and opinions expressed in this article are those of the author and do not purport to reflect the views and opinions of Russell Investments.
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