Nominating Beneficiaries for Your Super

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Superannuation is one of the most significant assets you accumulate during your lifetime, making it a critical part of your estate planning. However, unlike other assets that may pass through your Will, superannuation has its own rules and requires careful consideration when nominating beneficiaries.

If you’re unsure how to navigate this process, don’t worry. This article will guide you through the essentials of nominating beneficiaries for your super, explaining the options available and their implications.

Key Takeaways

  • Understand Who is Eligible: Superannuation law restricts who you can directly nominate, with nominees typically limited to spouses, children, financial dependents or those in an interdependent relationship.
  • Binding Nominations Provide Certainty: A valid, binding nomination ensures your super is distributed according to your wishes, avoiding delays or disputes.
  • Consider Your Estate: If your desired beneficiaries, such as siblings, nieces or charities, don’t qualify as dependents, nominating your estate allows distribution through your Will.
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What Happens to Your Super When You Pass Away?

Superannuation doesn’t automatically form part of your estate. Instead, your super fund trustee decides how your death benefits—comprising your super balance and any insurance payout—are distributed, unless you’ve made a valid binding nomination. This is why it is vital that you nominate beneficiaries to ensure your super is distributed according to your wishes.

Types of Nominations

There are three main types of beneficiary nominations for your super:

  • Binding Nominations
    • A binding nomination gives you greater control over who receives your super. If valid, the trustee is legally required to distribute your death benefits according to your nomination.
    • Binding nominations often need to be renewed every three years, so keep track of their expiry date.
  • Non-Binding Nominations
    • A non-binding nomination serves as a guide for the trustee but doesn’t guarantee your wishes will be followed.
    • The trustee retains discretion and will consider your nomination alongside other factors, such as financial dependency or relationships.
  • Reversionary Beneficiaries
    • This option is specifically for income streams such as pensions. You nominate a reversionary beneficiary to continue receiving payments after your death.
    • A reversionary beneficiary must typically be a dependent under superannuation law.

Who Can You Nominate?

Under Australian superannuation law, you can nominate the following as beneficiaries:

  • Your dependents:
    • Spouse (including de facto)
    • Children (including adopted or stepchildren)
    • Someone financially dependent on you
    • Someone in an interdependent relationship with you (e.g., living together and providing mutual care)
  • Your legal personal representative (LPR):
    • If you nominate your LPR, your super will be distributed as part of your estate and handled according to your will.

It is essential that you understand these categories because nominations outside these guidelines may be invalid.

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Why is Nominating Beneficiaries Important?

Nominating beneficiaries for your super ensures:

  • Your wishes are followed after your death.
  • Benefits are distributed without unnecessary delays or disputes.
  • Potential tax advantages are maximised for your beneficiaries.

Neglecting to nominate beneficiaries can lead to uncertainty and additional stress for your loved ones. By taking this simple yet crucial step, you can provide clarity and security for your family.

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FAQs About Super and Beneficiaries

Can I nominate a friend, charity, sibling, nephew or niece as a beneficiary?
Yes, but only if they qualify as being financially dependent on you under superannuation law. Alternatively, you can nominate your estate, allowing your legal personal representative to distribute benefits to them according to your Will. Learn more about what you need in your estate plan.

What happens if I don’t nominate a beneficiary?
If you don’t nominate a beneficiary, your super fund trustee will decide how to distribute your death benefits. This can lead to delays and outcomes that may not align with your wishes.

How often should I review my nomination?
It is a good idea to review your nomination whenever your circumstances change, such as after marriage, divorce or the birth of a child. Binding nominations should also be renewed every three years.

Are super death benefits taxed?
Death benefits paid to dependents (as defined by tax law) are generally tax-free. However, benefits paid to non-dependents may attract tax, so it is recommended that you seek professional advice.

Get Professional Advice on Nominating Beneficiaries for Your Super

Superannuation forms a key part of your financial legacy, so it is important that you nominate your beneficiaries wisely. If you are unsure about the best approach, our Tax Lawyers in Brisbane can help tailor your nominations to your personal and financial circumstances.

Contact us today for a confidential consultation.

For more insights into beneficiaries and the estate planning process, check out our related article: What Is a Beneficiary?.


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