Introduction

Superannuation is a significant component of estate planning in Australia, often representing a substantial portion of an individual’s wealth. However, the distribution of superannuation benefits upon a member’s death is governed by specific legislative requirements, which restrict who may be nominated as a beneficiary. This article examines the position of siblings under the superannuation rules, with a particular focus on the requirement of financial dependency.

Who Can Be a Superannuation Beneficiary?

Under the Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”), a superannuation fund trustee may only pay a death benefit to a “dependant” of the deceased member or to the member’s legal personal representative (i.e., the executor or administrator of the estate).

Section 10 of the SIS Act defines a “dependant” as:

• The spouse (including de facto and same-sex partners) of the member;

• Any child of the member (of any age, including adopted and step-children);

• Any person with whom the member had an interdependency relationship; or

• Any person who was financially dependent on the member at the time of death.

Siblings and Superannuation Death Benefits

Siblings are not automatically included in the definition of “dependant” under the SIS Act. This means that, unless a sibling can demonstrate that they were financially dependent on the deceased member or were in an interdependency relationship with them, they cannot be nominated as a beneficiary to receive superannuation death benefits directly from the fund.

Financial Dependency

A sibling may qualify as a “dependant” if they were financially dependent on the member at the time of death. Financial dependency is generally established where the deceased provided the sibling with necessary financial support for their maintenance, and the sibling relied on this support to meet their reasonable living expenses.

The degree of dependency required is a question of fact and may be subject to the trustee’s discretion. Evidence such as shared living arrangements, payment of bills, or regular financial contributions may be relevant.

Interdependency Relationship

Alternatively, a sibling may be considered a “dependant” if they were in an interdependency relationship with the member. This requires:

• A close personal relationship;

• Living together;

• One or each of them providing the other with financial support; and

• One or each of them providing the other with domestic support and personal care.

Again, this is a factual assessment and must be supported by evidence.

Consequences for Estate Planning

If a sibling does not meet the criteria for financial dependency or interdependency, they cannot be nominated as a beneficiary to receive superannuation death benefits directly. In such cases, the member may consider nominating their legal personal representative, so that the superannuation death benefit is paid to the estate and distributed according to the terms of the Will. This allows the member to provide for siblings (or other non-dependants) through their estate plan.

Conclusion

Siblings are not automatically eligible to receive superannuation death benefits unless they can demonstrate financial dependency or an interdependency relationship with the deceased member. Careful consideration should be given to the nomination of superannuation beneficiaries as part of the estate planning process, particularly where the member wishes to provide for siblings or other non-dependant individuals.