Updating your beneficiary nominations

Why this matters now

A nomination or appointment does not update itself when the person named in it dies. Depending on the document, the payment, gift or role may pass to someone named as a backup, fall to a trustee's discretion, or go the way the law sets out rather than the way you intended.

When a partner or close family member dies, they are often named across several documents:

• a superannuation death benefit nomination
• beneficiary nominations on life and other insurance policies
• your will, including who you named as executor
• an Enduring Power of Attorney for financial matters
• an appointment of someone to make medical or personal decisions for you, and an advance care directive

No single place updates all of them. Each is held separately.

None of this has to happen straight away, and there is no need to make big decisions while you are grieving. Many people come back to it in the months after the death.

Superannuation: binding death benefit nominations

Super does not automatically form part of your estate. When you die, the fund's trustee pays your death benefit according to your nomination, the fund's rules and superannuation law.

There are two main kinds of nomination. A binding nomination directs the trustee to pay the benefit to the people you have named, provided the nomination is valid and they are eligible. A non-binding nomination tells the trustee what you would like. The trustee takes it into account, but decides.

A nominated person who has died cannot be paid. For a binding nomination, that part of it can no longer operate, and under some funds' rules the whole nomination stops being binding. The trustee then usually decides where the benefit goes under the fund's rules. If the person who died was your only nominee, the whole benefit may be left to the trustee's discretion.

Binding nominations can also expire. They commonly lapse after three years unless confirmed, a fund's rules can set a shorter period, and some funds, including self-managed funds, allow nominations that do not lapse. Your fund can tell you what kind of nomination you hold and whether it is still current. ASIC's Moneysmart at moneysmart.gov.au has a plain-language guide to superannuation death benefits, including who can be nominated and what happens when a nomination lapses.

Eligible beneficiaries for a superannuation death benefit are limited by law to dependants (including a spouse or de facto partner, children, financial dependants, and a person in an interdependency relationship with you) or the legal personal representative of your estate. A sibling or friend can only be paid directly if they fall into one of those categories. How an interdependency relationship is judged is covered in when the people closest to you are not your legal family. An estate solicitor or your super fund can explain who is eligible.

Life insurance and other insurance policies

Beneficiary nominations on life insurance, income protection, trauma, and total and permanent disability (TPD) policies are held by the insurer, separately from your will. A new will does not change them, and a change made with one insurer does not change another.

Where the named beneficiary has died, what happens next depends on the policy terms. Often the benefit is paid to your estate, which means it is then dealt with under your will. Insurance held inside a super fund usually follows the super fund's rules and your super nomination instead.

The insurer can tell you who is currently recorded on each policy, and how a nomination is changed with them.

Your will

When someone named in a will dies first, the gift to them usually lapses, which means it fails. What happens to it then depends on how your will is worded.

• If your will names a backup beneficiary for that gift, sometimes called a substitution clause, it passes to them.
• If it does not, a gift of a particular item or amount generally falls into the rest of your estate.
• If the gift was the rest of your estate and no one else is named to receive it, part or all of your estate may pass under your state's intestacy rules. These set out who inherits when there is no valid will for that property.

Most states' wills laws have a rule for a gift to a child or other descendant who dies before you, which can pass the gift on to that person's own children. Those rules generally do not apply to a gift to a partner.

An executor appointment works in a similar way. If your will names a substitute executor, they can act. If it does not, someone, usually a person who benefits under the will, can apply to the Supreme Court in your state to administer the estate under the will instead. This is called letters of administration with the will annexed, and it adds a step and some cost for the people left to deal with your estate.

A will has to meet formal requirements to be valid, and so does any change to it. Crossing out or writing over an existing will can put part or all of it in doubt. A codicil is a separate formal document that amends a will.

An estate solicitor admitted in your state can tell you whether your current will still works the way you meant it to, and what your options are. Fees vary between firms.

Enduring Power of Attorney

An Enduring Power of Attorney (EPA) is a legal document that appoints someone to make financial and legal decisions on your behalf, including if you lose the capacity to make them yourself.

If your partner was your attorney, their appointment ends with their death. Whether the document still works depends on how it was written:

• If it names an alternate or substitute attorney, that person may be able to step in.
• If it appoints more than one attorney who can act separately, the remaining attorney may be able to keep acting.
• If it names your partner alone, there is no one left who can act under it.

If no one has authority and a person loses capacity, someone can apply to have a person appointed to manage their financial affairs, usually called an administrator or financial manager. In most states and territories that appointment is made by a tribunal, such as VCAT, NCAT or QCAT, rather than a court. A guardian is a separate appointment that covers personal and health matters, not money. Applying takes time, and it means someone other than you decides who is appointed.

Medical decisions and advance care directives

Every state and territory has a way for you to appoint someone to make medical, health or personal decisions for you if you cannot. The name changes by state: enduring guardian, medical treatment decision maker, attorney for health matters, substitute decision-maker, and others. In some states it can be part of the same document as a financial Enduring Power of Attorney. In others it is a separate document.

If your partner held that role, their appointment ends with their death. If the document names an alternate, that person may be able to act.

If no one is appointed, each state and territory has a list of people who can make medical decisions for you by default. These lists usually include a spouse or partner, a carer, and close family or friends, in an order set by that state's law. An appointment lets you choose who that person is, rather than leaving it to the list.

An advance care directive records your values and your wishes about medical treatment. The name, form and what it can do vary by state. In Queensland and Western Australia it is called an Advance Health Directive. In some places the same document can also appoint a decision-maker: a South Australian Advance Care Directive can appoint substitute decision-makers, a Queensland Advance Health Directive can appoint an attorney for health matters, and a Northern Territory advance personal plan can appoint a decision maker. In others, the appointment is a separate document.

If your partner is named in your advance care directive, as a decision-maker or as someone to be consulted, it may no longer work the way you intended. Your GP, a hospital social worker, an estate solicitor or Advance Care Planning Australia can explain the documents used in your state.

When to look at all of this

There is no legal deadline for reviewing these documents. In the first weeks, most people's energy goes to the funeral and your partner's estate, which has its own deadlines and demands. Many people come back to their own documents in the months that follow, when they have more room to think.

Your will, your Enduring Power of Attorney and any medical decision-maker appointment are often looked at together, in one appointment with a solicitor. Super funds and insurers are dealt with separately, and are usually administrative rather than legal processes.

Some people also find it helps to talk with the people they are thinking of naming, so those people know what they may be asked to do.