superannuation death benefit nominations




Many people are not aware that your superannuation is not an asset that you can gift in your will. You may direct that your superannuation be paid to your estate by a valid binding death benefit nomination, and then paid to your beneficiaries in your will. You may also direct that your superannuation be paid to someone who is your “superannuation dependant” by a valid binding death nomination.
If you do not have a valid binding death benefit nomination, or your superannuation fund’s trust deed does not allow a binding death benefit nomination, the trustees of the superannuation fund may pay your superannuation death benefits to your estate or any of your superannuation dependants.
Considering and making a superannuation death benefit nomination is very important – this is why we include advice on making a superannuation death benefit nomination in our packages.

Often, your superannuation death benefit (including the death insurance component payable on many funds) is a significant sum of money.
If you do not have a compliant binding death benefit nomination when you die, the trustees of your superannuation fund have an overarching discretion to pay your superannuation death benefits to either your spouse, children, dependent or your estate.
You may, however, complete a binding death benefit nomination in favour of your spouse, children, dependent or your estate.
Under the superannuation legislation, your death benefits can only be paid to your estate and/or directly to one or more of your “superannuation dependents” – that is:-
- your spouse (legally married, civil or de facto spouse of any duration);
- your children (minor and adult children, including adopted, step-children and children of your spouse)
- an interdependent at the time of death (that is, a person with whom you have a close personal relationship, lived with and one or both of you financially supports the other and provides domestic support and personal care) or
- any person who is financially dependent on you at the date of death.
If you have named any other person on your superannuation death benefit nomination form, it is invalid and the trustee of the superannuation fund has an overarching discretion to pay your superannuation death benefit to your superannuation dependants or your estate.
You may nominate your estate on your death benefit nomination and include a gift of those superannuation death benefits to the named beneficiary. Be aware, this strategy enlarges your estate that may be challenged under a family provision application.
A binding death benefit nomination (BDBN) compels the superannuation trustee to pay your superannuation death benefits in accordance with your wishes. The BDBN must be valid and in effect at the time you die – that is, the BDBN form must nominate a valid superannuation dependent or your estate and must comply with all of the legal requirements for a BDBN stipulated by the superannuation trust deed.
Most retail superannuation funds only allow their members to make lapsing BDBNs – that is, the BDBN remains in force for a maximum of three years and then lapses (expires). If a lapsing BDBN is not renewed or updated by the due date, it lapses and ceases to be binding.
Death benefit nominations that are described as “preferred” or “non-binding” are not binding and merely express your wishes that may be disregarded by the superannuation trustee.
Some superannuation funds do not allow binding death benefit nominations but may allow a “preferred beneficiary” nomination.
A preferred beneficiary nomination is not binding on the trustees of your superannuation fund.
Different tax consequences apply to the payment of your superannuation death benefit, depending on the recipient of the funds. If your superannuation death benefits are paid to your superannuation dependents who are also tax dependents (different rules apply), there is no tax payable on the funds. If, however, your superannuation death benefits are paid to your superannuation dependents that are not tax dependents, significant tax may be payable – for example, your adult children are generally not tax dependents (unless they have a disability).
It is important to consider the tax consequences that apply to the superannuation death benefit nomination you intend to make.
If you have a valid and effective BDBN for each of your superannuation accounts, the superannuation trustees are compelled to pay those benefits in accordance with your BDBN.
If there is not a valid and effective BDBN for a superannuation account, the superannuation trustees may pay to your superannuation death benefits to one or more of your estate (to be distributed in accordance with your will or the intestacy provisions if you do not have a will) and/or directly to one or more of your superannuation dependents (that is, your spouse (including an ex-spouse), your children, an interdependent or a financial dependent).
This process may be lengthy as the superannuation fund contacts all of your superannuation dependents to ask whether they intend to make a claim for the superannuation death benefits.
Conflict between family members, particularly in blended families and when short-term relationships are involved, often lead to a protracted claims and appeal process.
Adult children of previous relationships often miss out in the claims and appeal process unless you have a valid and effective BDBN.