Do you want a say in who gets your superannuation if you die? Then put some strategies in place now.

You may have ignored your Super up to now as you feel young , immortal  or just don’t like thinking about death (see I said “if you die” not “when you die”” just so you would continue reading). But in doing so you may not have left your superannuation to the person you intended.

Strict rules govern how your super is distributed when you die – and it’s important to follow those rules to make sure your money goes to whom you want instead of having a faceless Super Fund Trustee or worse an out of date Trust Deed decide.

One of the most important decisions you make when you join a super fund has nothing at all to do with investment. It revolves around the question of whom to nominate as the beneficiaries of your super when you die.

It is a critical decision – because if you don’t get it right your savings could be given to someone other than your preferred beneficiaries or the funds could be held up while disputes are mediated.

Few exceptions

When a fund member dies, subject to the trust deed, his or her superannuation may only be paid to:

  • The member’s spouse (including a de facto spouse, whether same-sex or not)
  • The member’s children
  • A person who was financially dependant on the deceased member at the date of death
  • A person with whom the deceased member had an interdependency relationship at the date of death
  • The member’s legal personal representative (estate)
  • NOTE that none of the above automatically include Mother, Father, Brothers or Sisters.

An interdependency relationship is defined as one between two persons (whether or not related by family) where it is very clear that:

  • They have a close personal relationship; and
  • They live together; and
  • One or each of them provides the other with financial support; and
  • One or each of them provides the other with domestic support and personal care.

For the purposes of that definition, all of the circumstances of the relationship between the persons must be taken into account, including (where relevant):

  • the duration of the relationship; and
  • whether or not a sexual relationship exists; and
  • the ownership, use and acquisition of property; and
  • the degree of mutual commitment to a shared life; and
  • the care and support of children; and
  • the reputation and public aspects of the relationship; and
  • the degree of emotional support; and
  • the extent to which the relationship is one of mere convenience; and
  • any evidence suggesting that the parties intend the relationship to be permanent;

A determination can take into account a statutory declaration signed by one of the persons to the effect that the person is, or (in the case of a statutory declaration made after the end of the relationship) was, in an interdependency relationship with the other person

In the case of a Retail or many Industry fund the beneficiaries you nominate when you join a fund are normally only a guide – the trustees of your fund will have the ultimate discretion as to who will receive your super. They will take into consideration any nomination of beneficiaries that you have made, but are not bound by your request.

The only exception is where your super fund allows you to make a “Binding Death Benefit Nomination” or even better a ” Non-Lapsing Binding Death Benefit Nomination”  . This is a nomination that the trustees are obliged to follow. You may only nominate a spouse, child, someone who you held an interdependency relationship with, or a financial dependant.

If you want your superannuation to pass to someone else, such as a friend or charity, you should consider nominating your estate as the preferred beneficiary of your superannuation entitlements. You superannuation will then be distributed according to the terms of your will – you would need to nominate such people or bodies as beneficiaries of your will.

Regular review

It is important to review death benefit nominations regularly and to include full details of your beneficiaries – including their relationship to you, their full name and their address. This applies even if you have used a Non-Lapsing BDBN as your circusmtances may have changed,

Keeping your super fund trustee informed of any changes to your beneficiaries – or changes to their personal details – will make the task of distributing your super much less complex for all involved.

It’s also worth noting that the basic binding death benefit nominations are only valid for three years – so make sure you update your nomination regularly or ask for a Non-lapsing Binding Death Nomination form.

To be valid, a binding death benefit nomination must be:

  • Made to the trustee in writing, clearly setting out the proportion of benefits to be paid to respective beneficiaries;
  • Be signed by the member in the presence of two witnesses over 18 years of age and who are not themselves named as beneficiaries;
  • Include a signed witness declaration;
  • Received by the trustee; and
  • Renewed every three years, although it is possible and in my opinion preferred to have a non-lapsing binding death benefit nomination.

Who to leave your superannuation to (and how) can be a complex question that can involve tax, social security and other financial considerations. You are well advised to seek professional assistance from a financial planner in this area and if dealing with an SMSF then a SMSF Specialist Advisor™ is the best place to start.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment


  1. Gareth

     /  July 13, 2012

    Great post and all too often neglected. Apart from the grief leaving a mess behind can cause if that’s not enough of a call to action would you rather have your entire estate reduce by approx 5% when left to the public trustee


  1. Skeletons in the Cupboards and Tax Man at the Door – Estate Planning Solutions for SMSF members « The SMSF Coach

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