Opinion
How do I ensure my partner gets my super when I die?
Noel Whittaker
Money columnistMy wife and I are both over 65 and have our respective super funds in pension mode. We have always nominated each other as the binding death beneficiary on our super accounts. However, I have recently come across the term “reversionary beneficiary”. Can you please clarify the pros and cons of us changing our nomination to the reversionary beneficiary? Is there a downside to this type of nomination?
Both a reversionary pension and a binding death benefit nomination are instructions to say what happens to your super when you die. A reversionary pension states that your existing super pension will continue to somebody else when you die, while a binding death benefit nomination says what happens to your super/pension when you die.
There are extensive rules around nominating who will receive your super and/or pension payments upon death.Credit: Simon Letch
A binding nomination is flexible as your money can go to a range of people in different proportions and can be used in the super and pension environments. Reversionary beneficiaries are restricted to the pension arena and can be given to only one person, which is usually your partner.
There are circumstances where adding a reversionary beneficiary can provide positive and or negative impacts for income-tested age pension recipients and those in aged care, particularly if the income stream was purchased before 1 January 2015.
You need to understand the specific rules of the super fund you are in, as each fund can have variances in each type of nomination. For those with large pension balances, the implications can be significant, particularly those with self-managed super funds.
As always, seek advice about the specifics of your situation as what may seem simple can actually be quite complex in certain circumstances.
I am 66. In this financial year, I started a pension payment plan with Australian Super whilst still working, and I am receiving a fortnightly payment. Are these payments treated as income and added to my salary, and will I have to pay tax on the total sum of both my pension payment and salary? Or, is the pension payment completely tax-free, and will I only have to pay tax on my salary income?
As you have reached the age of 60 your payments from superannuation are tax-free. You will only be paying tax on your salary income.
I am 78-year-old married woman, and my partner and I both receive part pensions. As a proud stay at home mum for many years, I therefore have had very little superannuation to my name. Some has been used, and now I have approximately $13,000 in the fund, which I have kept to put towards my funeral expenses. I would like to withdraw the total and buy a pre-paid funeral plan, but I am wondering what taxation implications I might face if I follow my intuition.
The amount used to buy a prepaid funeral plan or a funeral bond would be exempt for Centrelink purposes and there would be no tax consequences. Just make sure you advise your family and executor that you have a prepaid funeral plan in place.
I’m trying to get information about delisted shares from ASX that I cannot sell but are still valued by Centrelink deeming. Do I declare that they no longer are in my portfolio?
Services Australia updates the values of listed shares each year on 20 March and 20 September. Customers don’t need to notify them of the values of listed shares but must tell them if there are changes in the number of shares they own. You can choose to have their shares revalued at any time.
If a company’s shares are delisted, and the shares are still owned they may still have value. Services Australia uses different methods to value different share types, including shares in private companies or unlisted public companies.
Delisted shares are a deemed financial asset and any changes to the shares will be considered based on evidence provided. If a share has been delisted, I suggest you submit documentation about the delisting, including details of the company’s current financial position.
Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: noel@noelwhittaker.com.au
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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