Why people with superannuation need a will

Super isn’t automatically part of your estate

Here’s something that surprises most people: your superannuation doesn’t automatically form part of your estate.

When you die, your super fund’s trustee decides who receives your death benefit, unless you’ve made a valid nomination. The trustee will consider:

Any nomination you’ve made
Your dependants (as defined by super law)
Your legal personal representative (your estate)

Without clear instructions from you, the trustee makes the call.

🇦🇺 In Australia: Different super funds have different rules about nominations. Some only allow non-binding nominations. Some binding nominations expire after 3 years. Check your specific fund's rules.

Types of nominations

There are several ways to direct your super:

Non-binding nomination:

You suggest who should receive your super
The trustee considers your wishes but isn’t bound by them
Trustee makes the final decision
Most common type offered by funds

Binding death benefit nomination:

The trustee must pay according to your nomination
Usually expires after 3 years (needs renewal)
Must be correctly witnessed
Only valid beneficiaries can be named

Non-lapsing binding nomination:

Same as binding, but doesn’t expire
Not all funds offer this
Still needs valid beneficiaries

Reversionary pension nomination:

For those receiving a pension from their super
Nominates who continues receiving the pension
Important for retirees

Who can receive your super?

Super law limits who can be a direct beneficiary:

Dependants (can receive tax-free):

Spouse (including de facto)
Children under 18
Anyone in an interdependency relationship
Anyone financially dependent on you

Non-dependants:

Adult children (unless financially dependent)
Parents, siblings, friends
Can still receive super, but may pay tax on it
Often better to nominate your estate, then distribute through your will

Super and your will: coordination is key

Your super and will need to work together:

Option 1: Nominate individuals directly

They receive super outside the estate
Can be faster and avoid probate delays
But less flexible if circumstances change

Option 2: Nominate your estate (legal personal representative)

Super becomes part of your estate
Your will controls distribution
More flexibility, but tax treatment may differ
Subject to probate process

💡 Pro tip: If you nominate your estate, make sure your will actually addresses your super. Many wills don't explicitly deal with super, creating confusion.

Common super mistakes

❌ Never making a nomination — trustee decides
❌ Letting binding nominations lapse — defaults to trustee discretion
❌ Nominating someone who isn’t an eligible dependant — nomination may be invalid
❌ Nominating ex-spouse after divorce — could still be valid if not updated
❌ Assuming will overrides super — it doesn’t
❌ Not checking fund’s specific rules — they vary significantly

Tax implications

Who receives your super affects how much tax they pay:

Dependants — Generally tax-free
Non-dependants — May pay up to 32% on the taxable component
Children 18-25 — Complex rules depending on dependency status
Estate — Tax depends on who ultimately receives it

A financial adviser can help optimise the tax outcome.

Multiple super funds

If you have multiple super accounts (many Australians do):

Each fund needs its own nomination
One will doesn’t cover all funds automatically
Consider consolidating for simplicity

What to do now

Find all your super accounts — Check ATO’s myGov to see what you have
Check each fund’s nomination options — Binding, non-binding, non-lapsing?
Review current nominations — Are they current? Correct? Valid?
Decide your approach — Direct nomination or via estate?
Update your will — Make sure it coordinates with your super strategy
Set a reminder — If binding nominations lapse, you need to renew them

⚠️ Important: Your super could be worth hundreds of thousands of dollars. Don't leave its distribution to chance or a trustee who doesn't know your wishes.