Dying without a valid Will is bad enough but combine it with failing to make a binding nomination regarding your superannuation entitlements and the consequences can be disastrous.
Many younger people argue that they do not need a Will because they have minimal assets. The example below (based on a real-life scenario with details changed to preserve confidentiality) tends to defeat that argument.
Jake was 21 when he died in a motorcycle accident.
Jake’s assets were $5,000 in a bank account, surfboard ($300) and clothes/furniture. He had no debt.
He had been living with a few mates in a rental house near the beach for the past year after moving out of his Mum’s place. He was trying to save some money while working at Dan Murphy’s. His Mum and Dad had separated when Jake was three and his Mum had raised him. He had no relationship with his Dad and had not even seen him for 9 years.
Jake had some superannuation through his job with Dan Murphy’s and his Mum was surprised to learn that he even had life insurance in the superannuation which brought the total superannuation death benefit up to $350,000!!
- Problem 1 – Jake had not made a binding nomination regarding his superannuation. A female friend, Greta tried to claim some of the superannuation as a de facto spouse but after some stressful times for his Mum, the superannuation fund decided not to pay anything to Greta and paid it all to Jake’s estate.
- Problem 2 – When the $350,000 was paid by the superannuation fund to the estate, the Administrator was required to pay the estate to the beneficiaries under the Rules of Intestacy (because Jake did not have a valid Will). Jake did not have a spouse or children and the Rules of Intestacy required Jake’s estate to be divided equally between Jake’s Mum AND Dad. Jake’s Dad, who had nothing to do with him for most of his life received a $175,000 windfall (something Jake would never have wanted after everything his Mum did for him).
Jake could have made a valid Binding Death Benefit Nomination requiring the superannuation benefits to be paid into his estate. Jake could have made a Will appointing his Mum as Executor and giving her the whole of his estate. There would have been no stress in proving Greta was not really a de facto and Dad would have received an amount representing his interest in Jake’s life – ZERO.
Having an up to date and valid Will is important for everybody, regardless of how much they have or earn.