Super Nominations are super important and can be tailored in some cases to enhance your estate plan

 

When it comes to estate planning, many people don’t realise that your superannuation doesn’t automatically form part of your Will.

Unless you actively direct it, your super fund trustee will decide where your super goes when you die — and it might not be where you intended.

For most people Super is often one of the biggest assets in your estate so that should mean it deserves the same level of thought and strategy as your property or business succession plan.

 

Who can receive your super death benefits

  • Super death benefits can only be paid directly to a “SIS dependent”, such as:
  1. Your spouse
  2. Your children (including adult children)
  3. Anyone financially dependent on you at the time of death

If you want to leave your super to a grandchild, family trust, or charity then there is a way that your Will can do it via your super nomination.

 

A Binding Death Nominations (BDN) and non-binding death nominations are the formal nomination to your super fund trustee outlining who should receive your super and in what proportions.

The good news is that super nominations can be creative, flexible, and strategic ways to manage your super upon your passing especially if you have a Self-Managed Super Fund (SMSF).

 

Public offer/ Retail super funds – not very flexible

If you’re in a public offer fund, your nomination options are usually limited. You can typically nominate who gets your super and in what proportions, but you won’t be able to:

  • Assign specific dollar amounts, or
  • Add “what-if” clauses like: “If Jonny is under 25, he gets 75%; otherwise, split equally among my children.”
  • Large fund trustees simply can’t accommodate complex instructions.

 

Self-Managed Super Fund (SMSF) – can be very flexible

With an SMSF and a well-drafted deed, you can tailor your nominations to suit your personal circumstances, such as:

  • Creating binding nominations that last more than 3 years.
  • Mixing binding and non-binding nominations (e.g. binding to your spouse, discretionary for your children).
  • Making nominations based on fixed amounts or percentages.
  • Adding conditions (e.g. age-based allocations).
  • Directing specific assets (e.g. “BHP shares to Jenny, the investment property to James”).
  • Setting up super pensions for dependents to keep funds inside the tax-friendly super environment.
  • Creating child pensions or redirecting benefits through other estate channels if dependents don’t qualify.

Just remember — these options depend on your SMSF deed, so it’s crucial to ensure its flexible and up to date.

 

Can You Use Your Will to Distribute Your Super?

Not directly you’ll need to nominate your estate as the recipient and use your Will to distribute it.

This opens up options like:

  1. Testamentary trusts
  2. Education funds for grandchildren
  3. Gifting to charitable causes
  4. Asset protection strategies for vulnerable beneficiaries

It is so important that your Will is carefully structured to handle these funds appropriately. A generic Will may not cut it.

 

How it can all go wrong for you:

  • No nomination at all – leaving the trustee to guess your intentions
  • Nominating someone who isn’t a SIS dependent – which invalidates the nomination
  • Choosing a non-tax dependent – which may trigger avoidable tax liabilities
  • Failing to read your SMSF deed – leading to instructions that aren’t legally executable
  • Assuming your super is covered by your Will – when it might not be

 

TALK TO US so you can make Your Super Work Harder for Your Legacy

If you’re unsure how your super would be distributed if something happened to you tomorrow, now is the time to act.

With planning and advice your super nomination can:

  • Minimise tax
  • Maximise flexibility
  • Reduce legal disputes
  • Honour your legacy

General advice disclaimer General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article then you should seek advice from a qualified professional. VJC and VJC WM accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement for this purpose