Is my Superannuation covered by my Will?

Superannuation is one of the biggest assets most Australians own — and it usually doesn't pass through your will. Here's how death benefit nominations actually work, the tax trap that hits adult children, and why getting it right matters.

For most working Australians, superannuation is the second-biggest asset they own, after the family home. Yet it is also the asset people most often get wrong when planning their estate — because of one fact that catches almost everyone by surprise: your super does not automatically pass through your will.

You can have a perfectly drafted will leaving everything to your kids and your super can still end up somewhere else entirely.

Why Super Sits Outside Your Will

Your superannuation is not legally yours in the way your bank account is. It is held in trust by the trustee of your super fund, for your benefit, under a set of rules. When you die, the trustee pays out a “death benefit” according to superannuation law and the fund's trust deed — not according to your will.

Your will only controls assets that form part of your estate: your home (if solely owned), bank accounts, shares, personal possessions, and so on. Super only enters your estate if it is directed there. Otherwise, it is dealt with separately, by the trustee, based on your death benefit nomination.

What To Do Now

Have a look at your super fund and any existing nomination so nothing falls through the gap between the fund and your will.

• Log in to your fund or call them. Many people discover they have no nomination, or one that lapsed years ago.
• Decide between a person and your estate. Paying a spouse directly is usually simplest. Directing super to your estate gives you more control (and lets you provide for non-dependants through your will) but can change the tax and exposes it to estate claims.
• Use a valid binding nomination where you want certainty — and diarise its renewal if your fund's nominations lapse.
• Coordinate it with your will. Your super plan and your will should tell one consistent story.
• Get advice if there's any complexity — a blended family, a self-managed super fund, a large balance, or a vulnerable beneficiary.

A death benefit nomination handles your super, but everything else still needs a valid will. So check on your will too and get it updated.

Frequently Asked Questions

Does my super automatically go to the people named in my will?

No. Super does not automatically form part of your estate. It is paid by the trustee according to superannuation law and your death benefit nomination — not your will — unless you specifically direct it to your estate.

How do I make my super go to my estate?

You nominate your legal personal representative (your estate) as the beneficiary, ideally through a valid binding nomination. The benefit is then paid into your estate and distributed according to your will. This gives you control but exposes the benefit to any claims against the estate.

Do binding nominations expire?

In many funds, yes — a binding nomination commonly lapses after three years unless you renew it. Some funds offer non-lapsing binding nominations. Check your fund's rules, because a lapsed nomination reverts to the trustee's discretion.

Will my spouse pay tax on my super?

Generally no. A spouse (including a de facto partner) is a death benefit dependant for tax purposes and usually receives the benefit tax-free, whether as a lump sum or, in some cases, an income stream.

My children are adults — how do I reduce the tax they'll pay?

Options include directing super through your estate, structuring the components of your benefit during your lifetime, or other strategies that must be set up before death. The right approach depends on your circumstances, so get tailored advice rather than assuming a one-size-fits-all answer.

What happens if I have no nomination?

The trustee decides, at its discretion, which of your eligible dependants receives the benefit and in what shares. Your family has no guaranteed say, and disputes are common.

Don't Leave Your Biggest Asset to Chance

Your super may be worth more than everything else in your will combined. It deserves its own plan — not an assumption that “the will covers it,” because it doesn't.