Many people assume their will decides who gets everything when they die. For super, that is often not true. Superannuation sits in a separate box. Money held in a super fund does not automatically form part of your estate, so your will may never touch it.
The tool that does the work is a death benefit nomination. It tells your fund who you want to receive your super. Some nominations bind the fund and some only guide it. Getting this right is one of the simplest estate planning steps you can take.
Why super is treated differently
Your super fund is run by a trustee. When you die, the trustee holds the money and pays it out under the fund’s rules and the law. According to Moneysmart guidance on who gets your super if you die, super does not automatically form part of your estate. That means the executor named in your will cannot simply collect it and share it out.
The amount paid is called a death benefit. Moneysmart explains that it includes your account balance and any life insurance held inside your super. It can also include other amounts the fund must pay under its rules, such as interest. For people with insurance through their fund, the total can be much larger than the balance on the last statement.
If you make no nomination at all, the fund may decide who receives your super. That decision may not match what you would have wanted. It can also take longer while the trustee works out who your dependants are. A nomination gives the trustee clear instructions and removes much of the guesswork.
Who can receive your super
You cannot leave super to just anyone. Moneysmart lists the eligible people as your current spouse or partner and your children of any age. It also includes anyone in an interdependency relationship with you when you die and anyone financially dependent on you at that time. The last option is your legal personal representative, which means your estate.
You can nominate more than one eligible person and split the benefit between them. If you nominate your legal personal representative, the money flows into your estate. From there it is handled under your will, alongside your other assets. This is why your will and your nomination need to work together.
Friends, siblings and other relatives usually only qualify if they meet one of these tests. A brother you support financially might count as a dependant. A brother who lives independently may not. If you want super to reach someone outside the list, paying it to your estate and naming them in your will is one route to discuss with a lawyer.
The main types of nomination
Funds offer different kinds of nominations, and not every fund offers every type. Moneysmart describes the main options in plain terms. The choice affects how much say you keep and how much work you need to do over time.
- Binding and lapsing: the fund must pay the eligible person you name, but the nomination expires after three years unless you renew or change it.
- Binding and not lapsing: the fund must pay the person you name and the nomination does not expire.
- Binding reversionary: used when your super has become an income stream such as a pension, so the beneficiary can keep receiving payments. In some cases it cannot be changed once made.
- Not binding: this guides the trustee, but the trustee does not have to follow it.
Binding nominations take more effort, but Moneysmart notes they give more certainty and can speed up payment. A nomination that is not binding leaves the final call with the trustee. The trustee might then split the money among dependants in a way you did not expect. That can be fine for some families and a real problem for others.
Common mistakes that can void a nomination
Each fund sets its own validity rules for binding nominations. These rules are set out in the nomination form. Moneysmart warns that errors, including missed signatures, can make a nomination invalid. An invalid binding nomination is usually treated as one that is not binding.
Witnessing is one area to watch. Read the form closely and follow the instructions exactly. Check who is allowed to witness and whether the form needs a date. Small slips can undo the certainty you were trying to create.
Lapsing nominations cause another problem. Three years passes quickly, and an expired nomination gives the trustee no binding direction. Moneysmart suggests setting a calendar reminder for the expiry date. Reviewing your nomination when your annual statement arrives is another easy habit.
Life changes that should prompt a review
Relationships change, and nominations do not update themselves. A separation, a new partner or a new child are all good reasons to check your fund’s records. If you are going through a separation, adding super paperwork to your list of documents you’ll need in divorce is a practical step. Your fund will not know your situation has changed unless you tell it.
Marriage status can matter too. If you married abroad, it helps to know how an overseas marriage is recognised in Australia before relying on that relationship for estate planning. If a marriage was ended by a decree of nullity rather than a divorce, the legal aspects of nullity are worth understanding. In each case, check that the person you named still fits your fund’s eligibility rules.
Blended families need extra care. Your children of any age are eligible beneficiaries, so children from earlier relationships can be included. Parents who work to keep a meaningful relationship between children and both divorced parents often want their estate plans to reflect the same balance. A clear binding nomination, or a nomination to your estate paired with an updated will, can help avoid disputes later.
Tax can depend on who receives it
Who receives your super can also affect tax. The Australian Taxation Office page on super death benefits sets out its own definition of a death benefits dependant. It includes a spouse or former spouse, including a de facto partner, a child under 18 and a person in an interdependency relationship with you. It also includes anyone else who depended on you.
Adult children are treated differently. The ATO says children over 18 must be financially dependent on the deceased to count as dependants. Dependants can take a death benefit as a lump sum or an income stream, while other people must take a lump sum. An accountant or financial adviser can explain how the tax rules apply to your family.
Laws and fund rules differ
Wills and estates are dealt with under state and territory laws, which differ and change over time. Each super fund also has its own rules and forms. Before making a nomination, check what your fund offers and how it wants the form lodged. Your fund can also explain its death claims process if you have questions.
Frequently asked questions
Does my will decide who gets my super?
Not automatically. Super does not form part of your estate unless it is paid to your legal personal representative. Your fund pays the death benefit under its rules and any valid binding nomination. Your will only controls super that reaches your estate.
How long does a binding nomination last?
It depends on the type. A binding lapsing nomination expires after three years unless you renew it. A binding nomination that does not lapse stays in place until you change it. Check your fund’s form, as not every fund offers both.
Can I nominate a friend?
Usually not directly. Eligible beneficiaries are a spouse or partner, children, a financial dependant, a person in an interdependency relationship or your estate. A friend may qualify only if they meet one of those tests. Otherwise, you could nominate your estate and deal with the gift in your will.
What happens if my nomination is invalid?
An invalid binding nomination is usually treated as one that is not binding. The trustee can then decide how to pay the benefit. This is why following the witnessing and signing instructions matters. Ask your fund if anything on the form is unclear.
This article is general information about Australian law only and is not legal or financial advice. Super fund rules and state laws differ and change. Speak with a qualified lawyer about your own situation.
