Why Nominating a Super Beneficiary Matters More Than You Think
When thinking about your estate, you might assume everything you own — your property, bank accounts, investments, and superannuation — will simply be passed on according to your Will. But did you know your super doesn’t automatically form part of your estate?
Unless you’ve taken specific steps, it’s possible your super could end up in the wrong hands — even with a valid Will in place.
Superannuation Sits Outside Your Estate
Your Will outlines how your estate should be distributed. But your superannuation is held in trust by your super fund, and the Trustee ultimately decides who receives your super unless you’ve made a clear nomination.
To have your Will control how your super is paid out, you need to nominate your legal personal representative as the beneficiary of your super. Otherwise, your super fund Trustee may decide who receives your balance.
Who Can You Nominate?
Super rules say you can only nominate certain people, including:
Your spouse (including de facto partners)
Your children (of any age)
Someone who is financially dependent on you
Someone you have an interdependent relationship with (e.g. shared living and mutual support)
Your legal personal representative (the executor of your Will)
Types of Nominations: Binding vs Non-Binding
There are two main types of beneficiary nominations:
Binding nomination – Legally requires the Trustee to pay your super as you’ve directed. These usually need to be updated every three years, unless marked as non-lapsing.
Non-binding nomination – Acts more like a guide for the Trustee, but they can override it if they believe another person is more appropriate.
If you’re receiving a super income stream (pension or annuity), you may also be able to nominate a reversionary beneficiary, which allows them to continue receiving your pension after you pass, if they’re eligible.
Why This Is Important
We’ve seen situations where a client’s Will left everything to their children — but their super went to an ex-partner simply because the nomination wasn’t updated. It’s a tough conversation, but one that protects your legacy and your loved ones.
Don't Forget About Tax Implications
Another important reason to make a thoughtful nomination is the tax treatment of your super upon death. If your super is paid to a tax-dependant (such as a spouse or dependent child), it is usually tax-free. But if it’s paid to a non-dependant (such as an adult child who is financially independent), part of the benefit may be taxed (the taxable component of your super is taxed at 17%, including Medicare Levy). Understanding these rules can make a big difference in how much your loved ones actually receive. You may also save 2% Medicare Levy tax if you plan ahead. It is important to receive financial advice as well as legal advice.
Review Regularly — Especially After Life Events
Life changes quickly. In the last few years, have you:
Gotten married or divorced?
Had children or grandchildren?
Lost a loved one?
Updated your Will?
If so, it’s time to check your beneficiary nominations — both in your super and your Will. They don’t automatically link, and both need to reflect your current wishes.
👉 Your super is just one piece of your bigger financial picture. Let’s make sure all your plans are working together for your future. Book a call today to explore how ongoing advice can help you stay on track.
Your Vision Financial Solutions Pty Ltd ABN 64 650 296 478 and its Advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This article has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.