What Happens to My Super When I Die?
Superannuation is often one of your largest assets, but many Australians don't realise it's not automatically covered by your Will. What happens to your super after you die depends on how it's set up, who you nominate, and whether you're using a retail/industry fund or a self-managed super fund (SMSF).
This guide explains the basics, plus how to make sure your super is passed on tax-effectively.
Super Isn’t Automatically Part of Your Estate
Superannuation is held in a separate trust structure. That means it doesn't automatically form part of your estate unless the trustee of your super fund directs it there.
You need to make a binding death benefit nomination to control where your super goes. Without it, the trustee will decide who gets your money. That might not be what you intended.
Binding vs Non-Binding Nominations
There are two main types of nominations:
Binding nomination – ensures the trustee must follow your instructions. These usually expire every three years (unless non-lapsing).
Non-binding nomination – a guide for the trustee, but not enforceable.
If you want to ensure your super goes to the right person, a valid binding nomination is essential.
Who Can You Leave Your Super To?
The law limits who can receive your super directly:
Your spouse (including de facto)
Your children of any age
A person financially dependent on you
Your legal personal representative (your estate)
You can’t nominate siblings, parents, or friends unless they meet one of the above criteria.
Tax Considerations: Who Gets Taxed and Who Doesn’t
Whether your super is taxed on death depends on who receives it:
Tax-free if paid to a spouse, child under 18, or financially dependent person
Taxable if paid to adult children or other non-dependent beneficiaries
There are two types of taxable components:
Taxed component: taxed at 15% plus Medicare levy (total 17%)
Untaxed component: taxed at 30% plus Medicare levy (total 32%)
These rates apply when paid to non-tax dependants. That’s why planning is critical-especially if your super includes an untaxed element.
What About Self-Managed Super Funds (SMSFs)?
SMSFs give you more control, but they also come with more responsibility.
Key things to consider:
Check your SMSF trust deed allows for binding death nominations
Consider a reversionary pension for your spouse
Make sure your enduring power of attorney is up to date (in case you're incapacitated)
Review your trustee structure, especially for single-member funds
Without a clear plan, SMSFs can lead to costly disputes or unintended outcomes.
How to Make It Tax-Effective
To minimise tax when passing on your super:
Make valid, up-to-date binding nominations
Consider paying pensions to eligible dependents
Use reversionary pensions where appropriate
Keep your documentation consistent across your Will, super, and estate plan
Get professional advice, especially with SMSFs or large balances
Let’s Help You Protect What You’ve Built
Super is too valuable to leave to chance. Whether you’re in a retail fund or run your own SMSF, we’ll help you structure it right, nominate correctly, and plan tax-effectively.
Talk to us about getting your super in order before it becomes someone else’s problem.
Disclaimer: This content provides general information only, current at the time of production. Any advice in it has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material.
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