Who Gets Your Super When You Die? Nominations, Dependants and Tax

For a lot of Australians, superannuation is the second-largest asset they own, after the family home. It is also the one most likely to end up somewhere they never intended — because your super is not covered by your will, and the people allowed to receive it are not the same people who receive it tax free.

This is a plain-English guide to what actually happens to your super when you die: who can legally be paid, the four ways you can direct it, and the tax that catches families by surprise. It sits alongside our guides to estate and succession planning and how superannuation works.

Your will does not control your super

This is the part that surprises people. Your super is held in a trust, run by the fund's trustee. It is not owned by you personally, so it does not automatically form part of your estate, and the instructions in your will do not reach it. A will that carefully divides "all my assets" three ways can sit alongside a super fund paying the entire balance to somebody else entirely.

Your super balance also usually includes any life insurance held inside the fund. That means the amount at stake is often much larger than the account balance you see on your statement — and it makes getting the destination right more consequential, not less.

There are only two places your super can go:

Directly to one or more of your dependants, as super law defines them; or
To your legal personal representative — the executor of your estate — who then distributes it under your will.

The second route is the only way super reaches anyone who isn't a dependant: a sibling, a parent, a friend, a charity. If you want your super to follow your will, you have to say so, by nominating your estate.

Who is allowed to receive it

Under superannuation law, a dependant is a narrower group than most people assume — and a wider one than "the people I support".

Can be paid directly from the fund	Who that covers
Your spouse or de facto partner	Married, de facto or registered, of any sex
Your children	Any age — including adult, financially independent children
Someone in an interdependency relationship	You lived together in a close personal relationship, with financial support, domestic support or personal care
Anyone financially dependent on you	Assessed at the date of death
Your legal personal representative	Your estate — distributed under your will

Note who is missing: parents, siblings, nieces, nephews, friends and charities. None of them can be paid directly by the fund. They can only inherit your super through your estate.

The four ways to direct your super

An estimated 15.5 million Australians have no binding nomination in place. That does not mean their super is lost — it means somebody else decides where it goes.

Nomination type	What the fund must do	Expires?
Binding, lapsing	Must pay your nominated beneficiaries	Yes — typically every 3 years
Binding, non-lapsing	Must pay your nominated beneficiaries	No
Non-binding (preferred)	Considers your wishes, then decides	No, but carries no obligation
Reversionary (pensions only)	Continues paying your income stream to the named person	No — but often hard to change later
No nomination	Trustee decides among your dependants and estate	—

A lapsing binding nomination generally has to be signed and witnessed by two adults who aren't named as beneficiaries. That paperwork is the reason so many nominations quietly expire: the three-year clock runs out, nobody sends a reminder that gets read, and the fund reverts to trustee discretion. Not every fund offers every type — non-lapsing nominations in particular depend on the fund's own rules, so check what yours actually supports.

"Dependant" means two different things, and the gap between them is where the tax lives. Superannuation law decides who can be paid. Tax law decides who is paid tax free. An adult child is a dependant under the first and, in almost every case, not under the second.

The tax nobody expects

Your super balance is made of a tax-free component (broadly, contributions made from after-tax money) and a taxable component (employer contributions, salary sacrifice and investment earnings). The tax-free component is always paid tax free, to anybody. The taxable component is where it matters who is receiving it.

For tax purposes, a death benefits dependant is your spouse or former spouse, a child under 18, someone in an interdependency relationship with you, or someone genuinely financially dependent on you. Pay a lump sum to one of them and there is no tax at all. Pay it to anyone else — most commonly a grown-up, self-supporting child — and the taxable component is taxed at 15% plus the 2% Medicare levy on the taxed element, and 30% plus the levy on any untaxed element.

Worked example. Dianne is 71 and widowed. Her super balance is $500,000: a $150,000 tax-free component and a $350,000 taxable component, all taxed element. Her only child, Nathan, is 44 and financially independent. He is a dependant under super law, so the fund can pay him directly — but he is not a tax dependant. The tax on his benefit is $350,000 × 17% = $59,500, and he receives $440,500.

If Dianne instead nominates her estate, and her will leaves everything to Nathan, the Medicare levy doesn't apply to the estate. The tax becomes $350,000 × 15% = $52,500, and Nathan receives $447,500 — about $7,000 better off.

The solid bar is what the beneficiary keeps; the pale cap on top is tax. The large gap is between a tax dependant and a non-dependant — routing through the estate saves only the 2% Medicare levy.

The estate route is not free of trade-offs. Money that passes through your estate can be contested by a family provision claim, and it is generally slower to reach the beneficiary. A $7,000 tax saving is not always worth exposing the whole benefit to a challenge — which is exactly the kind of decision worth modelling before you sign a nomination form.

Where the 32% rate comes from

The higher untaxed element rate mostly appears in one situation: life insurance held inside super. When a fund has claimed a tax deduction for the insurance premiums, part of the death benefit becomes an untaxed element, taxed at 30% plus the levy in a non-dependant's hands. A modest balance with a large insurance payout attached can therefore carry a much bigger tax bill than the balance alone suggests. The fund calculates the split — ask yours how your benefit would be divided before you assume the number.

How long will the fund actually take?

Getting the nomination right also decides how quickly your family sees the money. ASIC has now reviewed the industry twice. Its Report 831, published on 10 June 2026, looked at what 45 trustees did between 20 November 2024 and 20 November 2025, following its first review in March 2025.

The direction of travel is good — internal complaints about death benefit delays fell 53% between early 2024 and late 2025, while claim volumes rose 10% in the year to October 2025. But the spread between funds is still enormous.

Share of death benefit claims closed within 90 and 180 days, fastest versus slowest fund in ASIC's review of 45 trustees (Report 831, June 2026).

At the slowest fund, fewer than one claim in ten was resolved within three months, and more than half were still open after six. ASIC Commissioner Simone Constant put it bluntly: "There is no excuse for delays in delivering better outcomes for death benefit claimants." A valid binding nomination is the single best thing you can do to keep your family out of that queue, because it removes the trustee's discretionary inquiry entirely.

What to check this week

Log in and look. Most funds show your current nomination, its type, and its expiry date in the member portal. If it says "no nomination", that is the trustee deciding.
Check the date. A lapsing nomination made more than three years ago has probably expired.
Check it still matches your life. Marriage, separation, divorce, a new partner or a new child are all reasons a nomination made years ago now points at the wrong person. Note that divorce does not automatically revoke a super nomination the way it can affect parts of a will.
Do it in every fund. Nominations are per fund, not per person. Two funds means two forms.
Check your insurance. Find out how much cover sits inside your super, and whether it creates an untaxed element for your beneficiaries.
If you run an SMSF, the trust deed governs everything here — see our guide to SMSFs, regulation and tax.

Where advice fits

Super death benefits sit at the join between your super, your will and your tax position, and the right answer genuinely depends on who is in your family. Whether to nominate people or your estate, whether a reversionary pension beats a lump sum for a surviving spouse, and whether it's worth drawing down and re-contributing to enlarge the tax-free component are all decisions with real numbers attached. A licensed financial adviser can model your actual balance and beneficiaries — and if you are also weighing the new tax on large super balances, the two questions are best answered together. Start with the plain-English basics on our estate and succession planning page.

Sources

Disclaimer: This article is general information only and does not take into account your objectives, financial situation or needs. It is not financial product advice. Super death benefit rules, tax rates and component definitions change over time, the types of nomination available depend on your fund's own rules and trust deed, and the outcome depends on your personal circumstances — check current figures with the ATO and your super fund. AdviceGenie is built by Cognify Labs Pty Ltd and does not hold an AFSL. Before acting on anything here, consider its appropriateness for you and speak with a licensed financial adviser.