The Australian Tax Office (ATO) confirms that super is not part of a person’s estate (usually), and the Trustees who control and run a super fund or Self-Managed Super Fund (SMSF), determine where the money goes.
The ATO site tells us –
Superannuation (super) doesn’t generally form part of a deceased person’s estate unless the trustee of the super fund pays it to the estate under the terms of the trust deed and the super rules.
In most cases, when a person dies their super fund will pay their remaining super to the person they have chosen as their nominated beneficiary. Super paid after a person’s death is called a ‘super death benefit’.
If there are no binding death nominations, the trustee of the super fund will decide how the benefit will be paid depending on the trust deed and super law. If the super fund trustee pays it to the deceased estate, the executor will deal with it as part of the estate.
If you believe you’re the beneficiary of a deceased person’s super or are the executor of a person’s estate, you should contact their super fund to let them know that the person has died, and ask them to release the super. If you don’t know the details of the deceased person’s super, you can Check your super look for their accounts.
The tax treatment of a super death benefit depends on whether the:
- Person receiving the benefit is a dependant or non-dependant of the deceased person, and
- Benefits are received as a lump sum or income stream.
If you receive a death benefit as the executor of a deceased estate, the estate pays tax on behalf of the beneficiaries of the super on the same basis as would have applied if the payment was paid directly to the beneficiary, excluding the Medicare levy.
And other links and info on the ATO page are –
- Death benefit paid to dependants
- Death benefit paid to non-dependants
- Finding lost and unclaimed super
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