By Colin Lewis, Head of Strategic Advice, Fitzpatricks Advice Partners
October 2025

Your superannuation is your money, and you need to treat it as such even when you may not be able to touch it for decades. This includes planning for what happens to it should you die – as morbid as this sounds.

It’s important to have an estate plan to ensure that on death your estate assets go to the right people in a timely manner. But superannuation is not an estate asset, so it won’t be dealt with by your will unless you or your super fund trustee (using its discretion) specifically direct it to your estate via your legal personal representative (LPR) – generally the executor of your estate.

Dealing with Super

You can pass on your super to whomever you want, but only certain beneficiaries can receive it directly from your fund, as super law dictates eligible dependants.

Only your spouse (including de facto partner), children (of any age), someone financially dependent on you or someone with whom you are in an interdependent relationship can receive your super directly.

If you want your super to go to someone else, e.g. sibling, parent, ex-spouse or charity, then nominate your LPR and deal with it in your will – so ensure you have a will. Unfortunately, far too many Australians don’t have a will.

Nominations

There are several ways of organising the distribution of your super upon death.

You could make a lapsing or non-lapsing binding death benefit nomination (BDBN), a non-binding nomination, a reversionary nomination for an income stream, or for self-managed super funds (SMSFs), incorporate your wishes into the fund’s trust deed.

A valid BDBN and/or reversionary pension provide the greatest certainty for where your super will go.

In a fund doesn’t offer BDBNs, the decision on who gets your super is in the hands of the trustee, so nominations in these funds are only a guide to the trustees of your wishes.

Trustee discretion also applies in funds that have BDBNs where there’s an invalid nomination because its expired, executed incorrectly, or an invalid beneficiary is nominated.

Do I need a binding nomination?

People say you must have a binding nomination to get the outcome you want, but this isn’t necessarily the case – like many things, it depends.

Implementing a BDBN shouldn’t be automatic, but it can be critical in many situations. Like where you’re in a blended family and want your super going to children from a previous relationship to the exclusion of your current partner, or to your current partner to the exclusion of kids because you’ve made alternative provision for them.

You may want a binding nomination in favour of a dependant if concerned your estate could be challenged and don’t want your super exposed. This is an important consideration for people in all states and territories except NSW where the concept of notional estates applies – a deceased’s personal estate, i.e. actual estate, is extended beyond those assets held solely in their own name at date of death.

You may want a BDBN in favour of your LPR and have your super distributed according to your will where you don’t want a vulnerable beneficiary getting a large sum directly because they’re a minor, spendthrift, gambler, drug addict, or you don’t want your money going to a beneficiary’s spouse in the event of a relationship breakdown.

Generally, adult children must take your super (if left to them) as a lump sum, so you might want a BDBN in favour of your LPR to have your super distributed via your will instead of being paid directly from your super fund to them.

This way your death benefits are taxed in the estate, not by the fund, which saves your beneficiary Medicare levy and doesn’t form part of their taxable income – which could otherwise cause tax and Centrelink issues for them.

Ideally, have a carve out in your will for super where you direct it to your estate as it helps the executor determine the tax treatment of your death benefits.

With SMSF succession, whoever controls your fund after death determines how and to whom benefits are paid. You may want to have a BDBN for certainty, but even then, you can’t be assured it’s enough to ensure your beneficiaries will readily receive your death benefits. While you may have a valid BDBN directing the distribution of your benefits, you need to ensure you have passed control of your fund to a trustworthy person.

Trustee discretion

The advantage of trustee discretion is your circumstances at date of death are considered, whereas a valid BDBN must be acted upon even if your situation has changed since you made it.

For example, if you’re legally married but separated and in a new relationship, a binding nomination to your estranged spouse will be acted upon even if you wanted your new spouse to receive your super.

If you’re not in a blended family and in a solid, stable relationship with amicable family relations where your wishes are unlikely to be contested, then you can be reasonably confident your super will go to whom you want without a binding nomination.

What happens to my superannuation pension after I die?

When commencing an income stream, e.g. account-based pension, you may be able to nominate a reversionary beneficiary, e.g. your spouse, to automatically continue receiving pension payments on your death as the pension doesn’t stop.

Making a pension reversionary shouldn’t be automatic and needs careful consideration as part of your overall estate plan to get the outcome you want.

As a reversionary pension doesn’t cease when you die, a death benefit doesn’t arise, so a nomination is irrelevant.

Nominations are only needed for death benefits – so, once the pension ‘reverts’ to your spouse, they will need to make a nomination because the pension stops on their passing and a death benefit arises.

They are also needed for accumulation accounts and non-reversionary pensions.

A non-reversionary pension ceases on death and the pension balance forms a death benefit, so a nomination is required – binding or non-binding.

If you have made a BDBN which includes and is counter to a reversionary pension, the pension will prevail, but it can depend on the governing rules of your fund.

The certainty of a BDBN is attractive, but as good as it sounds, it may lead to unintended consequences if not kept up to date.

Whatever you do, make a valid nomination and don’t leave it to chance!