A Superannuation Death Benefit Nomination is a document that lets you decide who receives your superannuation when you pass away. It is an important document because without it, someone else (the trustee of your superannuation fund) decides who receives your superannuation.
Purpose of a Death Benefit Nomination
The main purpose is to provide certainty and clarity regarding the distribution of a person’s superannuation benefits after their death. Without a binding nomination, the trustees of the super fund have the discretion to decide how the benefits are distributed, which may not align with your wishes.
Binding vs. Non-Binding
“Binding” means legally the nomination must be followed by the super fund trustee. However, a binding nomination will not be followed if it is not valid.
“Non-Binding” is more like a suggestion or guide for the trustee and is not always followed.
Beneficiaries
In a Death Benefit Nomination, you name the people who will receive your superannuation benefits when you pass away. Beneficiaries can include your spouse or de facto partner, children, and other dependents, or the legal personal representative (i.e. your estate).
Keeping it up to date
Life circumstances can change, such as marriage, divorce, or the birth of children. It’s essential to review and update your Death Benefit Nomination whenever significant life events occur to ensure that your superannuation benefits are distributed according to your current wishes.
It is important to renew a lapsing Death Benefit Nomination before it expires, usually every 3 years, if you want the nomination to remain in place.
Our team can assist you with drafting your superannuation binding death benefit nomination.
Contesting a Superannuation Death Benefit
Think the trustee’s decision is off? You can challenge a superannuation death benefit distribution (your death benefit claim), including where a binding death benefit nomination looks invalid or a non-binding nomination was given too much weight under the fund’s trust deed.
Common grounds to contest
- The binding beneficiary nomination isn’t a valid binding beneficiary nomination (expired, not witnessed, or names someone not an eligible beneficiary/death benefit dependant).
- The trustee overlooked financially dependent status or an interdependency relationship (close personal relationship, domestic support, personal care).
- The decision to pay a lump sum vs death benefit income stream (or via the legal personal representative) doesn’t align with the fund’s governing rules.
What to do next
- Lodge an objection with the fund—attach evidence of dependency/support and why the trustee’s interpretation is wrong.
- If unresolved, escalate to the Australian Financial Complaints Authority (AFCA) within strict timeframes.
Contact Kennedy Spanner Lawyers to review the trustee’s reasoning and optimise your next step.
Frequently Asked Questions
What happens to superannuation when someone dies?
On a member’s death, the super fund pays a superannuation death benefit under superannuation legislation and the fund’s trust deed. If there’s a valid binding death benefit nomination, the trustee pays the nominated beneficiary/legal personal representative.
If not (or it’s a non binding beneficiary nomination), the trustee decides among eligible beneficiaries (e.g., spouse/same sex partner, child, or those with financial support/interdependency). Payment may be a lump sum death benefit or a death benefit income stream (dependants only).
Who Can Make a Death Benefit Nomination
Only the fund member (account holder) can make or change death benefit nominations directing how the super death benefit/death benefit payments are paid. In some situations an Attorney appointed by an Enduring Power of Attorney can make and/or renew a binding death nomination for the fund member. Beneficiaries, potential beneficiaries, and the deceased’s legal personal representative cannot lodge a binding nomination on the member’s behalf.
The same rule applies to self managed super funds (subject to the deed). A member may also nominate a reversionary beneficiary for a super income stream.
How long is a Death Benefit Nomination Valid
A lapsing binding death benefit nomination is usually valid for three years from the date it’s signed and must be renewed before expiry.
A non-lapsing binding nomination remains in force until you revoke or replace it, provided it continues to comply with super fund rules and superannuation law and the nominated beneficiaries (or legal personal representative) remain eligible.
If a nomination expires or is invalid, the trustee may treat it as a non-binding nomination and decide how to pay the super death benefit.
What if I need help accessing a deceased loved one’s superannuation?
Superannuation can be a complex matter and it is best to seek legal advice to ensure you do not miss out on claiming the superannuation of a deceased family member. In some cases, a deceased person’s superannuation proceeds form part of their estate and is dealt with in accordance with their Will.
However, there are other cases where the superannuation monies do not form part of the estate and are paid out directly by the superannuation fund to the beneficiaries of that superannuation policy as a superannuation death benefit.
When the superannuation proceeds do not form part of the deceased person’s estate, it is possible for certain people to make a claim directly to the superannuation fund. Very strict time limits apply and it is important to understand that only certain categories of people can make a claim. Our team at Kennedy Spanner are well experienced in superannuation law and can assist with the legalities associated with access to superannuation funds of deceased persons.
Who can claim the super funds?
Generally speaking, to make a claim or access a deceased person’s superannuation fund, you need to have been a:
- Spouse;
- Child;
- Financial dependent or;
- had an inter-dependent financial relationship.
If you do not fit into these categories, you may not be eligible for the superannuation death benefit.
A complaint to the Superannuation Complaints Tribunal (SCT) can be made by a person who is unhappy with a decision made by the Superannuation Trustee in relation to distribution of the superannuation fund. However, very strict time limits apply.
If you have concerns about a deceased estate or superannuation access, contact us to make an appointment with one of our experienced Superannuation Lawyers.
How are superannuation death benefits taxed?
Tax treatment depends on who receives the benefit and its taxable component. A lump sum to a death benefit dependant (e.g., spouse/same sex partner, minor child, financial-dependent or interdependency) is generally tax free; non-dependants may pay up to a maximum tax rate on taxable elements.
A death benefit income stream counts towards the recipient’s personal transfer balance cap/transfer balance cap. Always get tailored advice on tax implications before choosing lump sum vs income stream.