What Happens to Your Super When You Die? (Australia)

Here is something that surprises many Australians: your superannuation is not automatically covered by your will. It sits outside your estate, and it follows its own rules.

Who decides where your super goes?

Unless you have given your fund valid, binding instructions, the trustee of your super fund typically decides who receives your super death benefit. The trustee considers your situation and your dependants, and their decision may not match what you assumed, or what your will says.

Nominations: the part worth checking today

Most funds let you nominate who should receive your super. A few things are worth knowing:

Binding versus non-binding. A non-binding nomination is a wish the trustee can consider. A binding nomination, made correctly, generally directs the trustee. The difference matters.

Nominations can lapse. Many binding nominations expire after a period of time unless renewed. A nomination made years ago may no longer be valid, and an out-of-date nomination can point to someone you would not choose today.

Who counts as a dependant has rules. Super law has its own definitions, and they affect both who can receive the benefit directly and how it may be taxed. Tax treatment can differ depending on who receives the money, which is a detail worth discussing with a professional.

What to do about it

1. Log in to each of your super funds, including any old ones from past jobs, and check what nomination is currently in place and whether it is binding and current.

2. If anything looks out of date, your fund can tell you how to update it. For questions about tax or which structure suits you, a licensed financial adviser or the Australian Taxation Office are the right places to ask.

3. Write down where your super is. Lost super is common precisely because nobody else knows the funds exist. If something happened to you tomorrow, could your family even name your fund?

The bigger picture

Super is one of several things that sit outside the will, which is why a will alone often is not the full picture. The free Executor Toolkit includes a simple roadmap for handling all of it, and The Estate Organiser gives you one place to record your funds, accounts and wishes so your family is not left hunting.

Download the free Executor Toolkit here.

Is super taxed when it goes to your family?

It can be, and this is the part that surprises people most. In the tax rules there is a difference between a dependant and a non-dependant. A spouse, or someone who was financially dependent on you, is generally treated differently from independent adult children. When super flows to a non-dependant, such as grown-up kids, part of it can be taxed in a way it would not be for a dependant. How much depends on your situation, so ask a licensed adviser what would apply to you. The point here is simply that there is a question worth asking.

What is a binding nomination, and can it lapse?

There are a few types of nomination. A binding nomination generally has to be followed by the fund. A non-binding one is more of a guide. And some nominations lapse over time, they quietly expire. If yours has lapsed, was never made, or is out of date because life has changed, the fund can end up deciding where your super goes instead of you.

Is there insurance hiding inside your super?

Often, yes. Many people have life insurance sitting inside their super fund that they have half forgotten about, and it has its own nominated beneficiary. It is worth knowing it is there, and who it is set to go to.

Related guides

Keep reading: Death benefit nominations explained, does a Will cover everything?, what does an executor do?, and the executor's first steps.

Educational content only. Not legal, financial or tax advice. Estate laws vary across Australian states and territories. Always consult a qualified professional about your specific situation.

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Educational content only. This is general information, not legal, financial or tax advice. Estate laws vary across Australian states and territories. Please speak to a qualified solicitor or adviser about your situation.