An SMSF lawyer has highlighted that while superannuation law does not clearly outline whether a fund member can direct benefits to their grandchildren, this could take place where the grandparent is classified as the principal carer of them and they are deemed to be financial dependants.
Cooper Grace Ward partner Scott Hay-Bartlem stated that although a superannuation death benefit was typically paid to a dependant, the legalities around grandchildren as recipients remained ambiguous.
“When you die, your superannuation death benefit can be paid to your spouse, your child, someone actually financially dependent upon you, somebody with whom you’re in an interdependency relationship or to your estate to be dealt with under your will,” Hay-Bartlem noted in an article on the legal firm’s website recently.
“Grandchildren don’t fit neatly into one of those categories that I’ve just outlined, so we can’t often pay directly from a super fund to a grandchild.”
However, he noted the situation differed if the grandchild were financially dependent on the individual, which was rare.
“If they’re in an interdependency relationship with you, which again sometimes happens but is rare, often we need to pay it into the estate,” he pointed out.
“Where you have a clause in your will that leaves your superannuation off to your grandchildren, there’s lots of issues in choosing the right way to pay your superannuation death benefits when you’ve died.”
Given the superannuation laws do not make specific provision for super to be passed onto a grandchild, he urged people to obtain legal advice specific to their individual circumstances on the matter.
Who superannuation benefits can be paid to has not changed substantially in recent years, however, some court cases have ruled a stepchild could receive them where the relationship could be proved to be strong between the step-parent and child.