Here’s a fact that surprises most people: your super doesn’t automatically go to whoever’s in your will. Super is held in trust, and who receives it when you die is decided by super law and your fund’s trustee — not your estate — unless you’ve set things up correctly. Getting this right is one of the most important (and most neglected) parts of any financial plan.
Why super is different from your will
Your will controls your estate. Your super (plus any insurance held inside it) is a separate pool, and it’s paid according to a death benefit nomination or, if you don’t have a valid one, at the trustee’s discretion. That means without the right nomination, your money could go somewhere you didn’t intend — or be delayed and disputed.
The types of nomination
- Binding death benefit nomination (BDBN) — legally binds the trustee to pay as you direct, provided it’s valid. The gold standard for certainty. Many lapse after 3 years unless renewed; some funds offer non-lapsing versions.
- Non-binding nomination — a preference only; the trustee still decides.
- Reversionary pension — an income stream that automatically continues to your spouse.
- No nomination — the trustee decides, which can mean delay, disputes and an outcome you’d never have chosen.
Who can actually receive your super
Super can only be paid directly to your dependants (for super purposes) or your estate. Dependants include your spouse or de facto, your children, someone financially dependent on you, or someone in an interdependency relationship. Anyone else — for example a parent or sibling who isn’t a dependant — must be paid via your estate.
The tax trap: adult children
What to do
- Check your nomination today — is it valid, binding, and current (not lapsed)?
- Make sure it matches your will and your overall estate plan.
- Consider the tax for your intended beneficiaries, especially adult children.
- Review insurance inside super — it’s often the biggest part of a death benefit.
Death benefits sit at the intersection of super, tax and estate law — exactly the kind of thing that’s easy to get wrong and expensive to fix afterwards. A complimentary Donmont review checks your nominations and the tax outcome for your beneficiaries, so your super ends up where you actually want it.
Frequently asked questions
Does my super go to my will?
Not automatically. Super is held in trust and paid according to a death benefit nomination or the trustee's discretion, separately from your will. It only goes through your estate if you nominate your estate or have no valid nomination and the trustee directs it there.
What is a binding death benefit nomination?
A binding death benefit nomination (BDBN) legally binds your super fund's trustee to pay your death benefit as you direct, provided it's valid. Many lapse after three years unless renewed, though some funds offer non-lapsing versions.
Do my kids pay tax on my super when I die?
Financially independent adult children are non-dependants for tax purposes, so the taxable component of super paid to them is generally taxed at 15% plus Medicare. Super paid to tax dependants like a spouse is generally tax-free. Advance planning can reduce this tax.
Not sure which fund is right for you?
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