Most of us check our super balance every now and then. But when was the last time you checked who’d actually receive it if you died?
It’s a question that’s easy to put in the “I’ll deal with it later” basket. But after years of contributions and investment returns, your super could end up being one of your biggest financial assets. Spending a few minutes checking your beneficiary nomination is a simple way to help make sure that money ends up where you intended.
Unlike your bank account or investment portfolio, your super doesn’t automatically form part of your estate. In many cases, your will isn’t the document that decides where it goes.
Instead, your super fund’s trustee – the organisation legally responsible for managing the fund and paying out benefits – usually decides who receives your super, based on your beneficiary nomination and the fund’s rules.
It’s one of those admin jobs that’s easy to put off until it’s too late. The good news? It usually only takes a few minutes to check.
1. Your will doesn’t automatically control your super
One of the biggest misconceptions about estate planning is that everything is covered by your will.
Not quite – super plays by its own rules.
Your super is held in trust by your fund, so it’s generally dealt with under superannuation law and your fund’s rules rather than your will.
That means you could carefully update your will after getting married, divorced or having children, but if you haven’t updated your super, the two documents could be telling different stories.
There is one important exception. You can nominate your legal personal representative (your executor), which allows your super to be paid into your estate and distributed according to your will. But you usually need to make that choice by completing a beneficiary nomination with your fund.
2. You can’t nominate just anyone
If you’ve ever thought, “I’ll just nominate my best mate,” unfortunately it doesn’t work like that. Super beneficiary rules are much more restrictive than the rules around your will.
In most cases, you can nominate:
- Your spouse or de facto partner
- Your children (including adult children)
- Someone who is financially dependent on you
- Someone you’re in an interdependency relationship with
- Your legal personal representative (your estate)
That means you generally can’t nominate a sibling, cousin or close friend directly unless they meet one of those legal definitions.
If you want someone outside those categories to ultimately receive your super, you may need to nominate your estate instead. If that’s something you’re considering, it’s worth getting legal advice so your estate planning documents work together.
3. A binding nomination and a non-binding nomination aren’t the same thing
Many people assume that naming a beneficiary guarantees they’ll receive the money.
Not necessarily.
- A binding nomination tells your super fund’s trustee who should receive your super, provided the nomination is valid and the person is eligible.
- A non-binding nomination tells the trustee your preference, but the trustee still makes the final decision after considering your circumstances.
The catch? Plenty of people don’t actually know which type of nomination they’ve got. It’s worth logging into your account and checking rather than assuming.
4. Your beneficiary nomination isn’t necessarily forever
Making a beneficiary nomination isn’t always a “set and forget” task.
Some funds use lapsing binding nominations, which expire after three years unless you renew them. Others offer non-lapsing nominations that stay in place until you change them.
The rules depend on your super fund (or your trust deed if you have an SMSF).
This catches plenty of people out. They filled in the paperwork years ago, assumed it was sorted forever, and never looked at it again. If you can’t remember the last time you checked yours, it’s probably worth another look.
5. Life changes are your cue to review it
Even if your nomination hasn’t expired, it may no longer reflect your wishes.
It’s worth reviewing after major life events like:
- Starting or ending a de facto relationship
- Getting married
- Having children
- Separating or divorcing
- Switching super funds
- Updating your will
Five years is a long time. Relationships change. Families grow. People change jobs, roll over super accounts and buy homes together. A nomination that made perfect sense a decade ago may no longer reflect the people you actually want to look after.
6. If you don’t make a valid nomination, someone else decides
If there’s no valid nomination on file, your super fund’s trustee usually decides who should receive your super.
That doesn’t mean the trustee will make a bad decision. But it does mean someone else is making the decision, based on the law and your fund’s rules rather than clear instructions from you.
Common reasons nominations become invalid include:
- They were never completed
- They expired
- The nominated person isn’t eligible
- Witness requirements weren’t met
- The paperwork wasn’t updated after major life changes
A quick review every few years can help avoid these issues and give you confidence that your wishes are clearly documented.
7. Receiving your super doesn’t always mean receiving it tax-free
Here’s another thing that catches people out: being allowed to receive your super doesn’t automatically mean it’ll be tax-free.
For example, a spouse will often receive a death benefit tax-free, but an adult child who isn’t financially dependent may still have to pay tax on parts of the benefit.
So while two people might both be eligible beneficiaries, they can end up with different tax outcomes. If your super balance is substantial, it’s worth understanding the tax implications as part of your broader estate planning.
A hypothetical example
Imagine Sarah nominated her husband as her binding beneficiary 10 years ago.
A few years later, they divorced. Sarah updated her will, bought a home with a new partner and assumed everything was sorted.
But what she didn’t realise was that her old beneficiary nomination was still on file with her super fund.
Whether that nomination would still apply depends on the type of nomination, whether it remained valid under her fund’s rules and her circumstances at the time of death. At the very least, an outdated nomination could create uncertainty and delays for the people she wanted to look after.
The frustrating part? Fixing it probably would’ve taken less time than choosing what coffee to order.
A five-minute check that’s worth doing
If you can’t remember who you’ve nominated – or whether you’ve nominated anyone at all – the next time you log into your super account is a good time to check.
While you’re there, confirm:
- Who you’ve nominated
- Whether the nomination is binding or non-binding
- Whether it has an expiry date
- Whether it still reflects your current circumstances
If you’re the kind of investor who automates contributions, buys broad-market ETFs and thinks in decades instead of days, you’ve already done the hard part.
Spending another five minutes checking your beneficiary nomination won’t boost your investment returns. But it can help make sure the wealth you’ve spent decades building ends up benefiting the people you actually want it to.
This article is general information only and doesn’t take into account your personal circumstances. Consider speaking with a licensed financial adviser about your super and estate planning, and check current rules with your fund and the ATO before acting.
