As recent media and research alerts have underscored, too many Australians currently lack the legal tools to control who inherits their superannuation when they die. Estimates suggest that at least 6.5 million Australians may have no binding nomination in place, leaving the fate of their superannuation to fund trustees’ discretion.
Given the growing size of estates and superannuation balances, particularly amid rising property and asset values, this has become a pressing estate planning issue.
Why super and wills don’t always align
Many people assume that their will determines what happens to all their assets, including superannuation. But superannuation is governed by separate federal (and fund) rules. Unless there is a valid binding death benefit nomination (BDBN), a super fund trustee may have discretion in paying out your death benefit. This discretion is guided by the Superannuation Industry (Supervision) Act 1993 (Cth) “SIS Act”.
If there is no nomination or the nomination is non-binding, the trustee may consider the nominated wishes but is not legally bound to follow them. In such cases, the trustee must apply its own discretion, which may or may not align with what you had intended. The trustee’s exercise of that discretion is limited to only provide superannuation fund benefits to dependents, as defined in the SIS Act. In these situations, the claims process can drag out as the trustee seeks input from all potential dependants. Often there is contention over whether a partner is in a de facto relationship with the deceased.
Trustees may only pay the death benefit to:
- The deceased’s legal personal representative (estate executor or administrator), or
- The deceased’s dependants (as defined in section 10 of the SIS Act):
- Spouse (including de facto and same-sex partners)
- Children (of any age, including adopted or stepchildren)
- A person who was financially dependent on the deceased
- A person in an interdependency relationship with the deceased (close personal relationship, living together, providing financial and domestic support)
If none of these categories apply, the trustee must pay the benefit to the estate.
Moreover, if a benefit is paid to your estate, it then becomes subject to the terms of your will (and potential disputes). But that does not avoid the risk that your super may end up with a different person entirely if the trustee’s discretionary decision diverges from your wishes.
The scale of the problem
Research by Super Consumers Australia (a not-for-profit super advocacy group) reveals that a significant proportion of Australians either:
- Have no nomination registered with their super fund, or
- Have non-binding nominations, which can be overridden.
The implication of this is that many people have no say in who inherits their superannuation.
Super Consumers’ research also highlights how vulnerable populations may face barriers in accessing and understanding superannuation entitlements, including how to make valid nominations and keep track of lapsed nominations.
The research also found that one quarter of 45–54-year-olds still haven’t made any nominations, despite the average account balances for males 50-54 being $246,955 and females aged 50-54 being $182,167 and only 54% of people aged 65-74 years believe they have made a binding nomination. These statistics show both the considerable disparity in balances for the sexes and that as we age, we tend to focus more on our estate planning. However, comparisons between ASIC research and the Super Consumer Australia research appears to show that many Australians who believe they have made a BDBN have actually only made a non-binding nomination.
ASIC’s review found that funds process death benefits for non-binding nominations the slowest, even slower than if no nomination is made at all.
How the law deals with Super Death Benefit Nominations
GESB (WA Public Sector Super)
In WA, members of GESB’s super scheme have a statutory framework that allows them to make a binding death benefit nomination. Under the State Superannuation Regulations 2001 (WA), reg 121, a member may direct the Board to pay the death benefit to permitted nominees.
If a valid binding nomination is in force, GESB must pay in accordance with it unless the nominated person is ineligible or cannot be found. If no nomination is valid, the benefit is paid to the executor or administrator of the deceased’s estate.
Some WA public sector schemes also provide options for lapsing or non-lapsing nominations, depending on scheme rules.
Private & Industry Super Funds
For private sector super, the mainstream federal superannuation law (SIS Act, fund trust deeds) and trustees’ rules govern death benefit nominations. Key points include:
- Fund rules matter: Not all funds permit binding nominations.
- Validity requirements: Must be in writing, signed, dated, and witnessed by two adults not nominated beneficiaries.
- Lapsing vs non-lapsing: Many expire after three years unless renewed. You should consider the benefits of non-lapsing v lapsing. Lapsing benefits generally only last 3 years and then must be remade or it is like you have not made any nomination. This could save you if you separated and had made a nomination for a former partner and forgot to change it. It could also cause your nomination to lapse and then your super go to a dependent you did not want to receive it.
- Eligible beneficiaries only: Dependants or your legal personal representative. If you want some one who is not a dependent (as defined in the SIS Act to receive your super, you must make a BDBN in favour of your legal personal representative and then make a valid will directing where you want your superannuation to go to.
- Family provision claims: Super in Western Australia can only be contested in Family Provision Act claims if it is left to your legal personal representative and it becomes part of your estate. If there is a potential FPA claim you should ensure your super does not become part of your estate.
Practical tips
- Check your super funds’ nomination rules
- Keep nominations current – especially after life changes.
- Align your super with your will – but treat them separately.
- Take care in blended family situations – dependants’ rules are strict.
- Meet formal requirements – signatures, witnesses, dates.
- Be aware of family provision risks – disputes can still arise.
- Support vulnerable clients – trace lost accounts, confirm nominations.
Checklist for protecting where your superannuation goes when you die
To simplify matters, here’s a checklist you can use to reduce the risk of disputes and unintended outcomes:
✅ Confirm nomination type – Is your nomination binding, non-binding, lapsing, or non-lapsing?
✅ Check eligibility of beneficiaries – Are they legal dependants (spouse, child, financial dependant, interdependent relationship) or your legal personal representative?
✅ Review expiry dates – Does your binding nomination lapse every three years? Set a reminder to renew it.
✅ Check fund rules – Each fund has its own requirements. Verify the forms and witness rules.
✅ Update after major life events – marriage, divorce, separation, new children, or deaths in the family should trigger a review.
✅ Coordinate with your will – If your super is directed to your estate, make sure your will clearly sets out your wishes.
✅ Retain evidence – Keep a copy of your nomination and confirmation from the fund. Ensure your executor knows where to find it.
✅ Seek legal advice for complex families – Especially in blended families or where you want to leave super to someone other than a dependant.
✅ Consider tax implications – Some beneficiaries (like adult, non-financially dependent children) may face tax on lump sums.
✅ Review regularly – Make nomination reviews part of your estate planning routine, ideally every 2–3 years.
Conclusion
The message is clear; many Australians currently have little or no control over who inherits their superannuation. The superannuation landscape depends heavily on the SIS Act, fund rules, correct formality, and diligent renewal.
Embedding superannuation into the estate planning conversation is no longer optional, it is essential. If you are unsure whether your nominations are valid or aligned with your will, our firm can review your superannuation arrangements as part of a comprehensive estate planning audit.
Please do not hesitate to contact us through our website www.lynnandbrown.com.au or call us on (08) 9375 3541 to make an appointment to discuss the above.
About the Author: This article is authored by Steven Brown. Steven Brown’s legal career covers working with multinational corporations and Australian listed companies to family-owned businesses. This range of experience has equipped Steven with the unique ability to offer tailored legal services that make a significant difference to businesses of all sizes.
