The largest asset your will may never touch.
Superannuation is held by the trustee of your fund, not by you, so it does not form part of your estate and a will does not direct it. What decides where it goes is the nomination you signed — and whether it is still in force.
In short
- Superannuation is held by a fund trustee and is not part of your estate, so your will does not direct it unless the benefit is paid to your legal personal representative.
- A valid binding death benefit nomination obliges the trustee to pay as you have directed. A non-binding nomination is only a preference the trustee must consider, and where there is no valid nomination the trustee chooses.
- Binding nominations in most funds lapse after a set period, commonly three years, unless they are renewed. Whether a non-lapsing nomination is available depends on the rules of your particular fund, and a fund need not offer binding nominations at all.
- Directing the benefit to your legal personal representative lets the will deal with it, but it also exposes the money to estate debts and to a family provision claim under the Succession Act 2006 (NSW).
- A benefit paid to a spouse is taxed differently from one paid to an adult child who is not a dependant for tax purposes, so the choice of recipient changes what the money is actually worth.
Superannuation is, for many people, among the largest assets they hold — and one of the few a will does not reach. Money in a fund is not owned by the member the way a house is. It is held by the trustee, on the terms of the trust deed and the superannuation legislation, and on death it is paid out by that trustee, not by your executor.
So a will leaving “the whole of my estate to my children in equal shares” may say nothing about the super. Unless the benefit has been directed into the estate, the will never gets to speak to it.
Who the trustee is allowed to pay
The Superannuation Industry (Supervision) Act 1993 (Cth) and the Superannuation Industry (Supervision) Regulations 1994 (Cth) set the outer boundary. A death benefit is generally payable to a dependant of the member, or to the member’s legal personal representative — the executor or administrator of the estate. “Dependant” is defined by that legislation and takes in a spouse, including a de facto spouse, a child of any age, and a person in an interdependency relationship with the member. Someone who was financially dependent on the member can also qualify.
Within that boundary, the fund’s own rules decide what forms of nomination exist. A fund is not obliged to offer binding nominations at all.
What a member can do
| What it is | What it does | What to watch |
|---|---|---|
| No nomination | The trustee decides, choosing between the dependants and the legal personal representative under the fund’s rules. | Decided after you die, by people who never met you. Objecting takes time and money. |
| Non-binding nomination | Tells the trustee your preference. It must be considered, but it does not have to be followed. | Easy to mistake for the other kind — the forms look much alike. This is a wish, not a direction. |
| Binding nomination | If it is valid and still in effect, the trustee must pay the benefit as the notice directs. | Validity is technical, and in many funds the notice lapses. An expired one puts you back in the first row. |
A binding nomination is a formal document, not a note in a file. In a fund regulated by the Australian Prudential Regulation Authority the usual requirements are that the notice be in writing, signed and dated by the member before two witnesses who are over 18 and are not mentioned in it, with the witnesses signing a dated declaration. Each person named must be a dependant or the legal personal representative, and the allocation must cover the whole benefit. Miss one requirement and the notice is not binding — and nobody tells you, because it is only tested after your death.
Most binding nominations lapse
In an APRA-regulated fund a binding notice usually ceases to have effect a set number of years after the day it was first signed, last confirmed or last amended, unless the member renews it. Three years is the period most funds work to.
Some funds offer a non-lapsing binding nomination, which stays in force until revoked or replaced. Whether that is available to you is a question about your fund: its trust deed decides, not the legislation alone. A self managed superannuation fund is different again: the deed answers what a nomination must look like and whether it lapses.
If you are already drawing a pension there is a further possibility. An income stream can be set up to revert automatically to a reversionary beneficiary, usually a spouse, who continues receiving the pension rather than a lump sum. How that sits with any nomination you have also signed is answered by the fund’s rules — and the two documents can contradict each other.
Check what the nomination actually says, not what you remember signing. One made before a separation, naming someone who has since died, or expressed in shares that no longer add up can fail on its face. So can one naming a sibling, a parent or a friend who is not a dependant in the superannuation sense.
Sending the benefit to the estate instead
The alternative is to nominate your legal personal representative. The trustee pays the benefit to your executor, it becomes part of the estate, and your will deals with it alongside everything else. That is the only way a will can genuinely direct superannuation, and it is the answer where the intended beneficiaries are not superannuation dependants, or where the money should be held on trust for children.
It has a cost. Money in the estate is available to meet the estate’s debts, and it sits squarely within the pool a family provision claim can reach under the Succession Act 2006 (NSW). A benefit paid straight to a spouse never enters the estate and is harder to reach — but not, in New South Wales, beyond reach. The Succession Act contains notional estate provisions with no equivalent in the other States, under which the Court can, in defined circumstances, designate property that never formed part of the estate and make it available to a family provision order.
The recipient changes what the payment is worth
Tax is the part most people do not price in. A benefit paid to someone who is a dependant for tax purposes is treated differently from one paid to someone who is not — and that definition, which comes from the Income Tax Assessment Act 1997 (Cth), is narrower than the superannuation one. So a financially independent adult child can be a perfectly valid nominee and still receive materially less than the balance suggests. The rates belong with your accountant; the point here is that the choice of recipient carries a price.
The quiet failure
Nominations are usually signed once, when the account is opened or the insurance added, and never looked at again. In the meantime people marry, separate, have children and roll one fund into another. Marriage and divorce affect a will under the Succession Act 2006 (NSW); they do not revoke a superannuation nomination in the same way. A rollover generally does not carry the old nomination across either — the new trustee has its own forms.
Many members also hold life insurance inside super, often as a default nobody consciously chose, so the sum paid on death can be several times the balance. A nomination signed years ago against a modest account may now be directing a far larger sum, to a person you would no longer choose.
- Ask each fund in writing what nomination it holds, whether it binds, and when it expires.
- Check whether a non-lapsing binding nomination is available, and on what conditions.
- Confirm the insured amount, so you know the size of what is being directed.
- Review it whenever the will is reviewed, and after any separation, death or new child.
Questions we are asked about super and wills.
Can my will simply leave my superannuation to my children?
Not directly. Superannuation is held by the trustee of the fund and is not part of your estate, so the will has nothing to operate on unless the benefit is first paid to your legal personal representative. You can achieve the result by nominating your legal personal representative, so the trustee pays the benefit to your executor and the will then deals with it — but that is a separate decision, with consequences for estate debts and for family provision claims.
How do I know whether my nomination is binding?
Ask the fund in writing for a copy of the notice it holds and the date it has effect until. A binding notice in an APRA-regulated fund generally has to be signed and dated in the presence of two adult witnesses who are not mentioned in it, name only dependants or your legal personal representative, and allocate the whole of the benefit. A form that does not meet the requirements operates, at best, as a preference.
My nomination expired years ago. What happens now?
If no valid binding notice is in effect, the trustee decides who receives the benefit, choosing among your dependants and your legal personal representative in accordance with the fund’s rules. An expired or non-binding nomination is material the trustee can consider, but it does not bind. Someone unhappy with the decision can object and take the complaint further — but the time allowed to object is short, is stated in the trustee’s notice, and can be counted in days.
Is it better to nominate my estate or a person?
It depends on who you want to benefit and what you want the money to do. A direct payment to a spouse is usually quicker, stays out of the estate and is generally taxed more favourably. A payment to your legal personal representative lets the will control it — useful where beneficiaries are not superannuation dependants, or where funds should be held on trust for children — but it is then available to estate creditors and to a family provision claim.
Tell us what's happened.
Send us the nomination each fund holds and a copy of your will, and we’ll tell you plainly whether the two documents actually agree with each other.
Information on this site is general in nature and is not legal advice, and may have been overtaken by a change in the law. Contacting us does not create a solicitor–client relationship.