What happens to your super when you die

What happens to your super when you die

Nominating a beneficiary to receive your superannuation benefits upon your death gives you peace of mind knowing that the funds will be paid according to your wishes.

How it works

Generally, superannuation does not automatically form part of your estate when you pass away. This means that unless you take specific steps, the trustee of a superannuation fund may have the discretion to decide who should receive the balance of your account upon your death, regardless of what you might indicate in your Will or direct payment to your estate.

To provide more estate planning certainty, you may be able to make a beneficiary nomination on your account to bind the trustee to follow your wishes or to give the trustee guidance as to who should receive your superannuation death benefit.

You’re only able to nominate someone who meets the definition of a ‘superannuation dependant’ or to your estate.

Whether or not the person meets the definition of a superannuation dependant will be determined at the time you pass away. A superannuation dependant includes:

  • your spouse (legal or de-facto, including same-sex)
  • your children (regardless of age)
  • someone who was financially dependent on you at the time of your death, and
  • someone who was in an interdependency relationship with you at the time of your death.

Beneficiary nominations

To ensure that your superannuation death benefit is paid to the person or people you wish, there are a variety of beneficiary nomination options which may be used. This can help give you more confidence that the right person will receive your benefit.

Binding nomination – this nomination is binding on the trustee of your superannuation fund provided it is valid at the date of your death. To be valid, the nomination must be in writing, signed and dated by you and appropriately witnessed. The person nominated must also meet the definition of a superannuation dependant at the time you pass away.

Some binding nominations only last for three years before they lapse, while others are valid indefinitely. However, it is a good idea to review your nomination regularly (preferably annually) to ensure the nomination continues to be appropriate.

If your superannuation is in a self-managed superannuation fund, the requirements to be a valid nomination will depend on the trust deed requirements. It is important that any nomination is in line with the rules of the fund, otherwise it may be invalid.

Non-binding nomination – a non-binding nomination means that the trustee of your superannuation fund will consider your nomination as an indication, but will retain full discretion to override it. The trustee will attempt to identify all potential beneficiaries and make their own decision about who is the most appropriate beneficiary. The trustee might pay the benefit directly to one or more individuals, or to your estate. This can take time to decide and to follow the correct process.

If the superannuation death benefit is paid to your estate and your Will does not make adequate provision for it or you pass away without a valid Will, your estate including super proceeds may be distributed in line with state based intestacy laws.

Reversionary nomination – this type of nomination is only available if you own a superannuation income stream. It is important to understand whether a reversionary nomination is appropriate based on the type of pension you have, whether a particular product provider offers this option, and who you wish to nominate as a beneficiary.

Taxation of death benefits

The tax payable on a superannuation death benefit payouts can be complex. In broad terms.

  • The benefits will be tax free if paid to a spouse, minor child or someone who is financially dependent on you at the time of your death
  • There may be tax payable if paid to someone who is non-dependent at the time of your death (eg. an adult child).

These tax rules and superannuation death benefit nominations in general can be complex so it is important to get advice for your situation.

About Reuben Zelwer


Reuben Zelwer established Adapt Wealth Management in 2011 to help time poor clients achieve financial freedom. For over 15 years, Reuben has helped professionals, executives, business owner and those approaching retirement make the most of their circumstances by making good financial decisions. Reuben’s professional practice is complemented by substantial voluntary work, which has included setting up financial literacy and savings programs in the local community.