Your superannuation death benefit nomination

Your will does not reach your super

Your super does not automatically form part of your estate. That surprises most people, and it is the single fact that makes everything else on this page matter.

Unless a valid nomination directs the benefit to your legal personal representative, your super never enters the estate and your will never touches it. Instead the fund's trustee decides who receives it, within limits set by Commonwealth law. A will that carefully divides everything you own can leave the largest single asset entirely out of its reach.

The two nominations you will meet most often

The difference is what the fund has to do with it.

A binding nomination directs the trustee to pay the benefit to the people you have named, as long as they are eligible. A non-binding nomination is a preference. The trustee takes it into account and does not have to follow it.

If you are already drawing a pension from your super, that pension may carry its own reversionary beneficiary, which works differently again. Your fund can confirm which of these is recorded on your account.

What it takes to make a nomination varies more than you would expect. Some funds allow it online in a few minutes. Others need a paper form signed in front of two witnesses, both over 18 and neither of them named in the nomination. The fund's own form sets out what it requires.

When a nomination stops working

A binding nomination usually lapses three years after it was signed, last confirmed, or last amended. The clock runs from that date, not from when you joined the fund.

Two things vary from that. A fund's own rules can set a shorter period. And many funds offer non-lapsing binding nominations, which do not expire at all.

That three year rule comes from the superannuation regulations and applies to funds regulated by APRA. It does not apply to a self managed super fund, where the trust deed decides whether a nomination lapses and how it has to be signed. Some public sector schemes sit outside it too. If your super is in either, the fund's own documents are what answer this.

A lapsed binding nomination is usually treated much like a non-binding one, so the trustee decides. A nomination may also not survive a fund merger or a transfer to a successor fund.

Who you are allowed to name

The law limits this to a dependant, or to the legal personal representative of your estate.

A dependant means a spouse or de facto partner, a child of any age, someone in an interdependency relationship with you, or someone financially dependent on you. A sibling or a friend who is not financially dependent on you cannot be named directly.

The fund works out who it can pay at the date of death, not on the day the form was signed. So a nomination can be valid when it is made and still not do what you expected if things change in between. Separating from a partner is what people are most often caught by, because a person you are still legally married to generally remains your spouse for super purposes even after you separate.

Naming an adult child is allowed under super law, and super law and tax law use the word dependant differently. An adult child who was not financially dependent is usually not a dependant for tax, which changes what reaches them. The superannuation death benefit guide sets out how that works.

ASIC's Moneysmart at moneysmart.gov.au has a plain-language explanation of who can be nominated.

If you have more than one super account

A nomination applies only to the account it was made against. It does not carry across to your other accounts, and you can hold more than one account within the same fund. If your super sits in three places, a nomination on one of them says nothing about the other two.

Accounts built up this way for years, because each new employer opened a new one. Since the stapling rules came in, a new employer generally pays into the fund you already have, so extra accounts are mostly a legacy of jobs held before then.

The ATO's service on myGov (my.gov.au) lists the super accounts that funds have reported to the ATO against your tax file number. Balances there are often months out of date, so the fund itself is the better source for a current figure. Linking the ATO service needs an identity check, which is not always easy when someone is unwell. The ATO on 13 10 20 can go through the same information over the phone instead. It has to be the member's own myGov account, and if you are helping someone else, the ATO can set up a formal authorisation so you can act for them.

That same screen offers to move accounts together. Be careful with it. Closing a super account usually ends any life insurance held inside it, and that takes effect straight away. If you are unwell, cover given up here is unlikely to be replaceable at any price, and it may be cover that was about to be claimed. A licensed financial adviser is the person who can weigh up what any of that means for you.

What your fund can tell you

Each fund holds its own nomination, its own form, and its own rules, so these are worth asking of each fund separately rather than once.

• Whether a nomination is currently recorded on the account, and who it names
• Whether it is binding or non-binding, and whether it lapses
• The date it was signed, confirmed or amended, and when it expires
• What the fund requires for a new nomination, including any witnessing
• What insurance, if any, is held inside the account

Asking for the answer in writing is worth the extra minute.

If someone has died and you are claiming a benefit rather than checking your own, the superannuation death benefit guide covers the claim process.