Superannuation is often one of an individual’s largest assets at the time of death. Many people mistakenly believe their superannuation can be dealt with in their will. In reality, superannuation is treated separately under Australian law, and failing to complete the correct forms can result in your superannuation proceeds going to someone you did not intend.
Understanding how superannuation works in Queensland is essential for ensuring your assets are distributed according to your wishes.
Why Superannuation Is Not Part of Your Estate
Under Australian law, superannuation proceeds are not considered part of your estate. Superannuation is governed by federal legislation, separate from state succession laws, meaning:
- Trustees are required to distribute super proceeds according to superannuation law and Death Benefit Nominations, not your will
- Superannuation can be gifted to a specific person without being subject to estate distribution rules
The advantage is that superannuation can go directly to your intended beneficiaries, bypassing probate. The downside is that lack of knowledge or incorrectly completed nominations can result in unintended recipients receiving the proceeds.
How to Ensure Your Super Goes to the Right Beneficiary
To ensure your superannuation proceeds are paid according to your wishes, you must complete a Death Benefit Nomination Form. This applies to all types of super funds in Australia, including retail, industry, and self-managed super funds (SMSFs).
There are two types of nominations:
- Binding Death Benefit Nomination
- Legally binds the trustee to pay the nominated beneficiaries
- Must be completed correctly and remain valid for the trustee to be bound
- Non-Binding Death Benefit Nomination
- Gives guidance to the trustee but allows them discretion to pay proceeds to other dependents or the estate
Some nominations may expire after a set period (commonly 3 years), requiring you to renew or re-nominate.
Common Issues That Invalidate a Death Benefit Nomination
A Death Benefit Nomination may be invalid if:
- The allocation does not equal 100%
- The form is not executed or witnessed correctly
- The beneficiary is not a dependent under superannuation laws or a legal personal representative
- The nomination has expired or been revoked
Who Is Considered a Dependent?
Under Australian superannuation laws, a dependent includes:
- Spouse
- Children
- Someone financially dependent on the deceased
- Someone in an interdependent relationship with the deceased
Only dependents or legal personal representatives can receive superannuation proceeds under a binding nomination.
What Happens If You Don’t Complete a Valid Nomination?
If no valid nomination exists:
- The trustee decides who receives the superannuation (a dependent or estate beneficiary)
- Alternatively, superannuation may be paid to your legal personal representative and become part of your estate, distributed under your will or intestacy laws
- Disappointed beneficiaries may challenge the distribution through the Superannuation Complaints Tribunal, but this is limited and difficult under strict timeframes and conditions
Key Takeaways for Queensland Residents
- Superannuation is not covered by your will
- To ensure your wishes are followed, complete a Binding Death Benefit Nomination
- Check that your nomination is valid, correctly completed, and not expired
- Failing to do so could result in the trustee deciding who receives your super proceeds, potentially against your intentions
NB Property Law provides expert advice for Queensland residents on superannuation, estate planning, and death benefit nominations. Our team can ensure your superannuation and assets are distributed exactly as you intend.
Contact NB Property Law today for guidance on drafting or updating your Death Benefit Nominations and estate planning in Queensland.