Binding death nominations — who gets your super when you die

The three nomination types

• Binding nomination — legally binds the trustee to pay your super to whom you’ve nominated. Your certainty.
• Non-binding (preferred) nomination — your nomination is considered but the trustee has discretion. Often ignored in family disputes.
• No nomination — trustee decides among “dependants” based on their own assessment. Can take months and end up in unexpected hands.

Who can be nominated

Under super law, death benefit nominees must be either:

• A dependant: spouse (married or de facto, same or different sex), child (any age), person financially dependent on you, or a person in an interdependency relationship
• Your legal personal representative (the executor of your estate — this lets the super flow through your will)

You cannot nominate a friend, a charity, a parent (unless financially dependent), or adult siblings directly. Route through your estate if you want to leave it to someone outside the dependant list.

The 3-year expiry trap

Most binding nominations expire after 3 years and become non-binding. You must renew them to keep them valid. People sign a nomination at 35 when they join the fund, never update it, and at 65 the document has been non-binding for decades.

Some funds now offer non-lapsing binding nominations that don’t expire. Check your fund’s options — they’re clearly better for most situations.

Tax on death benefits

This is why many people nominate their estate rather than adult children directly — allowing the estate to distribute tax-free to a surviving spouse first, rather than triggering non-dependant tax immediately.

The “both parents on one nomination” mistake

A common error: “My wife 50%, my kids 50%”. If any named person has pre-deceased you, or if percentages don’t add up, or if the wording is ambiguous, the fund may declare the whole nomination invalid. Keep it simple: one person, or clearly-specified fallbacks.

How to make or update one

1. Log into your super fund
2. Find “beneficiaries” or “death benefit nomination”
3. Complete the form — for binding nominations, most funds still require a physical form witnessed by two adults (neither named as beneficiary)
4. Submit the signed form
5. Set a calendar reminder for 2 years 10 months from now to renew it

SMSF death benefits

SMSFs work differently — the trust deed, along with any binding death benefit agreement, determines the outcome. If you run an SMSF with family members, the person left standing as sole trustee after your death may have significant discretion. This is why SMSFs need carefully drafted non-lapsing BDBNs or binding death benefit agreements. Get legal advice before assuming your wishes will flow through.