Is my Super included in my Will?

Superannuation (Super) is a significant part of financial planning for many Australians. Here’s what you need to consider about handling superannuation as part of your estate and distributing it according to Islamic inheritance laws.

Is Superannuation Automatically Included in Your Will?

No, superannuation is not automatically included in your Will. Unlike other assets, such as property or bank accounts, your superannuation is held in trust by your Super Fund. This means it is not technically part of your estate unless specific steps are taken.

If you want your superannuation to be included in your estate for distribution to your beneficiaries, it's crucial to communicate your wishes to your superannuation provider. Failing to do so may result in your Will having no control over these benefits, as they might not be part of your estate.

How Is Superannuation Distributed?

The distribution of your superannuation depends on a number of factors:

1. For Industry Super Funds:

• Binding Nomination:
  • You can nominate a beneficiary directly through your Super Fund. If you have a valid binding death benefit nomination, the Super Fund will pay your super to the nominated person(s), bypassing your estate.
  • Ensure your nomination is renewed every three years if your Super Fund requires it.
• No Binding Nomination:
  • If you don’t have a binding nomination, the Super Fund trustees will decide who receives your Super. They typically distribute it to your spouse, children, or dependents, or to your estate.

2. For Self-Managed Super Funds

Members of a Self-Managed Superannuation Fund (SMSF) receive benefits from the fund. In the event that a member passes away, their superannuation benefits are usually either to their dependents — such as a spouse, child, or someone with whom they had an interdependency relationship, as defined under superannuation law — or to their legal personal representative, typically as part of their estate.

Who Can You Nominate?

Under Australian law, you can nominate the following as beneficiaries for your Super:

• Your spouse or de facto partner.
• Your children (biological, adopted, or step-children).
• A person financially dependent on you.
• Your estate (to be distributed according to your Will).

Including Superannuation in an Islamic Will

If you want your superannuation distributed according to Islamic inheritance laws and included in your estate under your Will, you need to plan carefully as follows:

1. Nominate Your Estate in Your Super
   • If you want your superannuation to form a part of your estate at death, you need to contact your superannuation provider(s) and change your death nomination to “a binding and non-lapsing benefit in favour of the Executor(s) of my estate”. You should not name the Executor(s), as your Executor(s) may change. Following this process allows your Super to become part of your estate and be distributed according to the shares defined in your Islamic Will.

2. Draft a Shari’ah-Compliant Will

• Use a platform like MuslimWills to create a Will that specifies how your estate, including your superannuation, should be distributed.
• The Will ensures that fixed heirs (e.g., spouse, children, parents) receive their shares as outlined in the Qur’an.

How It Is Distributed

Let's say a Muslim man has a valid Islamic Will and nominates his Executor to represent his estate as the beneficiary of his Super. Upon his death:

• His Executor contacts the relevant superannuation fund and provides the necessary documents, including a certified copy of the death certificate and proof of authority to act on behalf of the estate. The Super fund may require the Executor to complete a withdrawal form. Once the Super is released, the Executor adds the superannuation to the deceased's estate.
• After debts and funeral expenses are paid, the estate — including the Super — is distributed according to Islamic inheritance laws.
• If he left a discretionary bequest (wasiyyah), the Super benefits are included towards the wasiyyah.

What Happens Without a Will?

If you pass away without a Will:

• Your superannuation will either be distributed by the Super Fund trustees or included in your estate and distributed according to Australian intestacy laws.
• This may not align with Islamic inheritance principles.

Creating a Will ensures your superannuation is handled in line with your faith.

Tax Considerations

There may be tax implications for a beneficiary receiving a benefit from your policy, or for superannuation to be paid to the estate and streamed to beneficiaries if they are not a “death benefits dependent”, such as a child over 18. If you have concerns regarding tax implications of your estate, we encourage you to seek further tax and/or legal advice.

How MuslimWills Can Help

MuslimWills simplifies estate planning for Australian Muslims. The platform:

• Helps you create a Will that complies with Islamic and Australian laws.
• Provides guidance on how to handle superannuation in your estate.
• Offers tools like the inheritance calculator to ensure fair distribution.

By nominating your estate as the beneficiary and creating a Shari’ah-compliant Will, you can make sure your Super supports your loved ones in accordance with the teachings of Islam.