Mistakes, Complaints and Official Sources
Super death benefits and beneficiary nominations: binding, non-binding and common mistakes
Who gets your super when you die, how binding and non-binding nominations work, who counts as a dependant, tax on death benefits, and the nomination mistakes to avoid.
Your super does not automatically follow your will. When you die, your super fund's trustee pays your balance and any life insurance as a death benefit, generally to your dependants or your legal personal representative (your estate), following your beneficiary nomination if you have made a valid one. A binding nomination, if valid and current, generally requires the trustee to pay the people you named; a non-binding nomination only guides the trustee's discretion. Many binding nominations lapse after three years unless the fund offers non-lapsing ones. Check your nomination after any major life event and whenever you consolidate or change funds.
This guide is part of the super mistakes overview. It explains general rules; trust deeds differ between funds. General information only, not legal or financial advice.
Who can receive your super
Super law limits who can receive a death benefit directly:
| Recipient | Who it includes |
|---|---|
| Spouse | Married or de facto partner, including same-sex partners |
| Children | Children of any age, including adopted children, stepchildren and children of a spouse |
| Financial dependants | People who relied on you financially, fully or partly |
| Interdependency relationship | Two people with a close personal relationship who live together and provide financial, domestic and personal support |
| Legal personal representative | The executor or administrator of your estate, who then distributes it under your will or intestacy rules |
You cannot nominate a friend, sibling or parent directly unless they are a dependant under these definitions; in that case, the usual approach is to nominate your estate and provide for them in your will.
Nomination types compared
| Type | How it works | Lapses? | Watch for |
|---|---|---|---|
| Binding (lapsing) | Trustee must follow it if valid | Generally after 3 years | Must be renewed; strict witnessing rules |
| Binding (non-lapsing) | Trustee must follow it if valid | No, until you change it | Only if the fund offers it; still update after life changes |
| Non-binding (preferred) | Trustee considers it but decides | No | Trustee may pay someone else |
| Reversionary pension | A pension continues to a nominated person (usually spouse) | No | Only for income streams; affects their transfer balance cap |
| No nomination | Trustee decides under the trust deed | — | Can delay payment and cause disputes |
Validity requirements for binding nominations usually include signing in front of two adult witnesses who are not beneficiaries, naming only eligible dependants or your legal personal representative, and stating shares that add up to 100%.
Tax on death benefits
- Paid to a tax dependant — for example a spouse, a child under 18, or someone financially dependent on you — a lump sum death benefit is generally tax-free.
- Paid to a non-dependant for tax purposes, such as an adult independent child, the taxable component is taxed: generally up to 15% plus the Medicare levy on the taxed element and up to 30% plus the Medicare levy on any untaxed element (often arising from insurance proceeds).
- Paid to your estate, tax depends on who ultimately benefits, but the Medicare levy is not applied.
Illustrative example: an adult independent child receives a $200,000 death benefit with a taxable (taxed element) component of $150,000. Tax at 17% on that component: $25,500. The tax-free component of $50,000 is not taxed. The definitions are technical, so families should check the ATO's guidance or ask a registered tax agent.
Common nomination mistakes
- Never making one. The trustee decides, which may not match your wishes and can take longer.
- Letting a binding nomination lapse after three years.
- Naming someone who is not eligible, such as a sibling who is not a dependant, which can make a binding nomination invalid.
- Not updating after separation, marriage or a new child. A new relationship, a divorce or a new child can change who should receive your super.
- Losing the nomination when consolidating. A nomination belongs to an account. If you roll that account into another fund, make a new nomination there; see consolidating super through myGov.
- Assuming your will covers super. It does not, unless your super is paid to your estate.
- Forgetting the insurance. Life cover in super is paid as part of the death benefit and can be much larger than your balance.
Claiming a death benefit for someone who has died
- Contact the fund and tell it of the death. The ATO can help identify the deceased person's funds if you are the legal personal representative; see also finding lost and unclaimed super.
- Provide a death certificate and proof of your relationship.
- If there was life insurance, the fund will lodge the insurance claim.
- The trustee decides who receives the benefit. Under the law, before paying, trustees of most APRA-regulated funds must notify potential beneficiaries of a proposed distribution, and you may object within a set period.
- If you disagree with the decision, you can complain to the fund and then to AFCA within strict time limits; see complaints to your fund and AFCA.
A five-minute nomination check
- Log in to your fund and find the beneficiaries section.
- Check the type (binding, non-binding, reversionary) and the expiry date.
- Check that the people named are still the people you want, and are eligible.
- Repeat for every fund you hold.
- If your situation is complex — blended families, a business, people with a disability — get legal advice on your will and super together.
Frequently asked questions
Can I leave my super to a charity?
Not directly. You can nominate your estate and leave a gift to the charity in your will.
Does a binding nomination override my will?
For the super it covers, a valid binding nomination usually decides who receives the benefit, regardless of your will. Your will covers assets outside super.
What if my nomination is invalid?
The trustee decides under the trust deed, usually considering any preferences you expressed and the needs of dependants.
Can someone challenge where my super goes?
Potential beneficiaries can object to a proposed distribution and complain to AFCA. Super paid to your estate may also be subject to family provision claims under state and territory law.
Official sources
- Moneysmart — who gets your super if you die, claiming a death benefit
- ATO — tax on super death benefits
- AFCA — death benefit complaints and time limits
- Federal Register of Legislation — Superannuation Industry (Supervision) Act 1993
