What happens to your super when you pass away?

Super is a key part of retirement planning in Australia, helping you fund those golden years. But have you ever wondered what happens to your super when you die? It’s a good question, especially if you want to make sure your hard-earned money goes to the people who matter.

Let’s break it down in simple terms.

Where does your super go?

First off, your super isn’t automatically part of your will. So, if you don’t plan ahead, your super might not go where you want it to. It's important to provide clear instructions to your super fund through beneficiary nominations to help ensure any payments reflect your wishes.

Beneficiary nominations

When you join a super fund, you can usually say who you want to get your super when you die. This is called making a nomination, and there are two main types:

1. Binding nominations

Set in stone: A binding nomination is a solid instruction to your super fund. If it’s valid, the fund must follow it.

Expires: These usually need to be renewed every three years unless you make a non-lapsing one that doesn’t expire.

Who you can nominate: You can nominate your spouse, kids, anyone financially dependent on you, or your legal representative handling your estate

2. Non-binding nominations

More like a suggestion: A non-binding nomination is more like a preference. The fund will consider it, but they aren’t bound to follow it.

Flexible but uncertain: This gives some flexibility but could mean your money goes to someone you don’t intend it to if the trustee sees fit.

Who can get your super?

Your super can go to your dependants or your estate. Dependants usually include:

• Your spouse or partner.
• Your kids (including step kids and adopted kids, both adult and young children).
• Anyone you’re in a close, interdependent relationship with who you generally live with.

How is it paid out?

Your super can be paid out as a lump sum or as an income stream, depending on:

• The rules of your super fund.
• The type of beneficiary (spouses and young children can generally get it as an income stream, while others might only have the option of accessing it as a lump sum).

Taxes on super death benefits

Taxes on your super death benefits can vary based on who gets the money and the makeup of your super balance. Generally:

• Benefits to financial dependants are usually tax-free.
• Benefits to non-dependants might get taxed.

Making sure your super goes where you want

1. Make sure you have a valid beneficiary nomination in place.

2. Keep nominations updated

Make sure your nominations are up-to-date and continue to reflect your wishes, especially after big life changes like getting married, divorced, or having kids.

3. Think about binding nominations

These give you more certainty and ensure your wishes are followed.

4. Get guidance from our super specialists

At Prime Super, we can help you navigate the rules and make sure everything’s set up how you intend it to be to provide peace of mind for you and your family.

For more information on planning your ideal retirement, head to our retirement hub.

The retirement hub

We’re always here to help.

If you have any questions about retirement planning or would like to know how it works with your super, book a time online to talk with a super specialist.

The information provided here is intended solely for general informational purposes and should not be construed as legal advice. It is recommended that you consult with a qualified legal expert as part of your comprehensive estate planning.