Superannuation and Death Benefits in Australia
Last updated: June 2026
Why Superannuation is Different from Your Estate
Superannuation does not automatically form part of your estate when you die. Your super is held in trust by the fund trustee, not by you personally. This means:
- Your will does not automatically control who receives your super
- The trustee has discretion over who receives your super (unless you make a binding nomination)
- Your super may be distributed differently from the rest of your estate
Death Benefit Nominations
You can tell your fund who you want to receive your super by making a death benefit nomination. There are two types:
Non-binding nomination:
A guide for the trustee, but the trustee can override it and pay someone else if they believe it is more appropriate.
Binding death benefit nomination (BDBN):
The trustee must pay your super to the person(s) you nominate, as long as they are an eligible beneficiary and the nomination is valid. A binding nomination gives you more control.
Who Can You Nominate?
You can only nominate dependants or your legal personal representative (estate):
- Your spouse or de facto partner
- Your children (of any age)
- Someone financially dependent on you
- Someone in an interdependency relationship with you
- Your legal personal representative (which routes the super through your will)
You cannot nominate siblings, parents, or friends unless they meet one of the above criteria.
Non-Lapsing vs Lapsing Nominations
Most binding nominations lapse after 3 years unless renewed. If your nomination lapses, the trustee regains discretion. Some funds offer non-lapsing binding nominations — check with your fund.
Always review your nomination after major life events: marriage, divorce, birth of children, death of a nominated beneficiary.
Tax on Death Benefits
Super death benefits are taxed differently depending on who receives them:
| Recipient | Tax treatment |
|---|---|
| Spouse, child under 18 (tax dependant) | Tax-free |
| Other dependants at law | Tax-free |
| Adult children (non-dependants) | 15–30% tax on taxable component |
| Estate (non-dependant beneficiaries) | 15–30% tax on taxable component |
The tax treatment is one reason to consider routing super to a tax dependant (e.g. a spouse) directly rather than through the estate, where it may be distributed to adult children who are tax non-dependants.
Life Insurance in Super
Many Australians have life insurance inside their super fund. On death, this pays out in addition to your super balance. The same nomination and tax rules apply to insurance payouts within super.
Check how much life insurance you have inside your super — it may be significant.
What Happens If You Have No Nomination?
If you die without a valid binding nomination, the trustee will look at:
- Who your dependants are
- Any non-binding nomination on file
- Your personal circumstances and financial needs of potential beneficiaries
The trustee aims to distribute to dependants, but has discretion in how to do so.
Action Steps
- Check your super fund's current beneficiary nomination and when it expires
- Consider whether a binding nomination better reflects your wishes
- Review after any major life change
- Talk to a financial adviser or estate planning lawyer about the interaction between your super, will, and tax