Super Death Benefits: Nominating Your Beneficiaries
Superannuation doesn't automatically form part of your estate the way most other assets do, which means a standard will alone often isn't enough to control who receives it. This is one of the more commonly misunderstood parts of estate planning.
Why super sits outside your will by default
Your super fund's trustee generally has discretion over who receives your death benefit, unless you've made a valid binding nomination — which means, without one, the trustee decides based on your dependants and other relevant factors, which may or may not match what you'd have wanted or what your will says.
Binding vs non-binding nominations
A binding death benefit nomination legally requires the trustee to pay your benefit to the person or people you've nominated (provided they're eligible, generally a dependant or your estate), assuming the nomination is valid and current. A non-binding nomination is only a guide for the trustee, who retains discretion to decide otherwise. Binding nominations generally need to be renewed periodically (commonly every three years) to remain valid, and can lapse if not updated — worth setting a reminder to review it.
Who can be nominated
Eligible beneficiaries generally include a spouse or de facto partner, children, financial dependants, someone in an interdependency relationship with you, or your legal personal representative (meaning it's paid to your estate and then distributed according to your will). Nominating someone who doesn't fit an eligible category can render a binding nomination invalid. Choosing which of these options fits a particular family situation is a personal decision that depends on individual relationships and estate planning goals — many people work through this with a licensed financial adviser or estate planning professional rather than deciding based on general information alone.
How tax applies to beneficiaries
Tax treatment differs depending on whether the recipient is a tax dependant (broadly, a spouse, children under 18, or someone financially dependent on you) versus a non-tax-dependant (such as an adult, financially independent child) — payments to non-tax-dependants can attract tax that wouldn't apply to a tax dependant receiving the same benefit. This distinction is a common source of unexpectedly large tax bills for adult children receiving a parent's super, and is worth planning around if relevant to your situation.
Reviewing your nomination regularly
Life changes — marriage, divorce, new children, a change in relationship — can make an old nomination outdated or even invalid. It's worth reviewing your nomination whenever your personal circumstances change, and at minimum whenever your fund prompts you to renew it. Because who to nominate depends on family circumstances, your will, and how tax applies to different beneficiaries, this is often worth reviewing with a licensed financial adviser or estate planning professional rather than relying on general information alone.
Frequently asked questions
What happens if I don't make any nomination at all?
The trustee decides who receives your benefit, based on your dependants and relevant circumstances at the time, which may take longer to resolve and may not reflect your actual wishes.
Can I nominate my estate instead of a specific person?
Yes — nominating your legal personal representative directs the benefit into your estate, to be distributed according to your will, which can be useful if you want the flexibility of a will to determine the split.
Does a binding nomination expire?
Many binding nominations lapse after a set period (commonly three years) unless renewed — check your specific fund's rules and set a reminder to review it.
Death benefit nomination rules and death benefit tax treatment are set by legislation and can change — confirm current details with your fund before publishing.
This article contains general advice only. It has been prepared without taking into account your personal objectives, financial situation or needs, and does not constitute a recommendation to acquire, hold, or dispose of any financial product. Before acting on this information, consider its appropriateness to your own circumstances, and seek independent financial, tax and/or legal advice, or speak with a licensed financial adviser, before making any decision.
