‘How can I ensure my grandkids, not my children, benefit from my super?’

Mar 08, 2019
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If your children or grandchildren aren't financially dependent on you, super laws don't allow them to be named as beneficiaries to your fund. Source: Getty

Q. I am a retired widow and I had decided to change the beneficiary of my superannuation from my child to my grandchildren, but have discovered that I am unable to do so because they are not ‘financially dependent’ on me, nor do we have an ‘interdependent relationship’. They receive birthday and Christmas presents/cash from me and I help out on occasions with money. I do not wish to leave the superannuation (which is not large by any means) to my children. So, the above leaves me ask the questions:

  • How do I manage to navigate around above?
  • What would happen to the superannuation if I didn’t have anybody listed in the ‘relationship to member’?

A. This is a good question. Actually, neither your children nor your grandchildren may be regarded as financially dependent or in an interdependent relationship for superannuation purposes unless they meet strict technical guidelines. To be financially dependent effectively means what it says – the children or grandchildren must be still living with you and/or dependent upon you to meet the majority of their financial needs. Occasional gifts will definitely not qualify you for this definition.

An interdependent relationship implies someone being emotionally or financially dependent upon you and could include, for example, a sibling or a parent or other family member.

Assuming that your grandchildren do not fit these categories, you can still leave your superannuation entitlements to them through your will, however. You can instruct your superannuation fund that your beneficiary is your ‘personal legal representative’ as this person is effectively the executor of your estate. You then need to ensure you specify in your will that your superannuation monies are to be left directly to your grandchildren.

You should be aware that non-dependent grandchildren will pay some tax on the receipt of the superannuation benefit. You will need to get personal advice if you want to find out how much, but it is a maximum of 15 percent of the account balance.

If you have a question for Starts at 60’s money experts, email it to [email protected].

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.

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