Your Will is crucial, but it doesn’t control your super. This can trip up many business owners and families with complex setups.
At Bayside Wills & Estates, we regularly speak with clients who assume their super is covered by their Will. It usually isn’t, and that can lead to outcomes you didn’t plan for.
Here’s how super is handled when you die, and what you must do to make sure it lands where you want.
Superannuation Sits Outside Your Estate
Superannuation isn’t like your house or bank account. It’s held in a trust, managed by your super fund or SMSF trustee. That means:
- It doesn’t automatically form part of your estate
- Your Will won’t control it unless your balance is paid to your estate
- You need to give separate instructions to your superannuation fund via a death benefit nomination
Two main types of nominations exist in Australia — binding and non‑binding super nominations:
- Binding death benefit nominations — legally compel the trustee to follow your instructions (if valid)
- Non-binding nominations — act as a guide, but the trustee ultimately decides who receives your benefit
If you don’t have a valid nomination, or it’s expired, your fund decides who gets your super. That might not match what you want.
Learn more about how to make a binding death benefit nomination in Australia.
Super in Blended Families: Why it Matters
For most people, super is their biggest asset after the family home. It’s also one of the most contested parts of an estate.
In blended families, adult children from a previous relationship can miss out if all the super goes to the surviving spouse. Once paid, the money is theirs to pass on as they choose.
To avoid this, you should:
- Consider directing super to your estate, then using your Will to distribute it via a testamentary trust or super proceeds trust
- Make nominations that balance the needs of your current partner and children from prior relationships
Estate planning for superannuation in blended families is particularly complex. Get legal advice on setting things up and keeping your wishes secure.
A Note on Tax and Adult Children
If your super goes straight to a spouse or minor child, it’s usually tax-free. However, tax on super can be up to 15% if it goes to an adult child who isn’t a tax dependant.
This can be managed with the right structure — for example, pay the super to your estate and use a tax-effective Will to distribute it.
Executors: What Happens to Super When Someone Dies?
If you’re an executor, you might not need to handle super at all. It depends on where it’s paid:
- Paid directly to a nominated beneficiary, in which case the executor is not involved
- Paid to the estate, in which case the executor must manage the funds as part of the estate
Knowing the difference is important, especially if there’s no valid nomination. You might need to work with the super fund and help the family members with claims.
So, Does My Will Cover Superannuation?
In short: your Will only covers super if you direct it to your estate.
That’s why you need to plan your Will and super together. The best estate plans line up:
- Your Will
- Your fund nominations (binding or otherwise)
- Any SMSF rules (if applicable)
- Appropriate trust structures, where needed
- Consideration of tax outcomes
If you don’t plan, you risk disputes, delays, and missed tax savings.
You need a plan to ensure your super goes to the right people, at the right time, and in the right way. For most Melbourne business owners and blended families, this means using binding nominations and testamentary trusts.
At Bayside Wills & Estates, we help you bring it all together, ensuring your Will and superannuation strategy work side by side.
Book a free review of your superannuation death benefit strategy today.
