Why a binding death benefit nomination matters more than your will when it comes to Super
Most people assume their will covers everything they own, but it doesn’t. Super, for example, sits outside your estate, which means your will has no say over who gets it. The only thing that decides where your super goes is the death benefit nomination you’ve made with your fund, and for many people, that nomination is missing, outdated, or non-binding.
It is important to understand the difference between a binding and non-binding death benefit nomination. A non-binding nomination is an indication of your preference. The fund’s trustee can consider it but doesn’t have to follow it. They can use their own discretion to decide who receives the money, based on who they judge to be financially dependent on you. A binding nomination is different. If it’s valid and up to date, the trustee is legally required to follow it. No discretion, interpretation, or waiting on someone else’s decision about your family.
Some situations are especially vulnerable to disputes, such as a second marriage, where an ex-partner is still listed as the default beneficiary because no one thought to update it. It can also cause problems in blended families where adult children from a first relationship and a current spouse both have a claim, and no clear instruction exists. Even something as simple as a fund not recognising a de facto partner without documentation, because no nomination was ever on file to remove the ambiguity.
Without a binding nomination, the trustee decides, and their idea of who should receive the money doesn’t always match what the person actually wanted. Families have ended up in tribunal disputes over similar issues, with delays stretching well beyond what anyone expects at an already difficult time.
Most binding nominations lapse after three years unless renewed. It’s easy to make one once and assume it’s sorted forever, but an expired nomination is usually considered invalid and reverts to non-binding, and the protection quietly disappears without anyone noticing until it’s needed.
Checking who’s nominated on your super account, and whether that nomination is still binding and current, takes a few minutes and is well worth the time to avoid unravelling your estate later.
Talk to your adviser about setting up or reviewing your super death benefit nomination.
