By Philippa Billings, Head of Advice, Otivo

Your super is probably one of the largest sums you'll ever leave behind — and it may be the one asset you don't fully control when you die. Unlike your savings, it doesn't belong to you outright; it's held in trust by your fund, so when you die it's generally the trustee, not your estate, who decides where it goes. A binding death nomination is the one document that takes that decision back. Here's how it works, who you're actually allowed to name, and the quiet three-year trap that undoes a lot of good intentions.

A binding death nomination is a written, witnessed instruction telling your super fund who receives your superannuation when you die. When valid, it legally binds the trustee to pay your benefit to the people you name, instead of leaving the decision to the fund. Under superannuation law, you can only nominate dependants or your legal personal representative.

How does a binding death nomination work?

A binding death benefit nomination is a written direction to your super fund's trustee, naming who should receive your super death benefit and in what proportions. According to ASIC's MoneySmart, when a binding nomination is valid the fund must pay your benefit to the people you've nominated, unless doing so would be unlawful. That's the key difference between "binding" and "non-binding": a non-binding nomination is a guide the trustee can choose to follow or set aside, while a valid binding nomination removes that discretion.

The benefit itself is bigger than many people expect. Your super death benefit is your account balance plus any life insurance held inside super. Insurance proceeds don't go straight to your family — they're paid into your super account first, then distributed according to your nomination and the fund's rules. So the same form that directs your balance also directs any insurance payout.

Who decides where your super goes when you die?

Here's the part that surprises people. Super generally doesn't form part of your estate, because it's held in trust under the Superannuation Industry (Supervision) Act 1993. Without a valid binding nomination, the trustee decides who receives your super, choosing among eligible people based on superannuation law and the fund's own rules. A non-binding nomination only guides that decision.

That discretion is exactly where things can go wrong. In March 2025, ASIC released Report 806, Taking ownership of death benefits, after reviewing 10 trustees that together held 38% of all member benefits in APRA-regulated funds. It found that 78% of the death benefit claim files it examined had delays caused by problems within the trustee's control, and flagged poor customer service in 27% of them. A valid binding nomination is one of the few levers that takes the decision — and some of that delay risk — off the table.

Who can you nominate to receive your super?

A common misconception is that you can leave your super to anyone, the way you might gift a possession. You can't. As at May 2026, superannuation law limits a death benefit nomination to a defined group — the people super law lets you name:

• Your spouse, including a de facto or same-sex partner
• Your children of any age, including adopted, step and ex-nuptial children
• Someone in an interdependency relationship with you — a close personal relationship involving shared living, financial support and care
• Someone who was financially dependent on you
• Your legal personal representative — in other words, your estate

This is why a friend, parent or sibling generally can't be named directly unless they were financially dependent on you or in an interdependency relationship. Where someone wants their super to reach a person outside this group, one approach is to nominate the legal personal representative, so the benefit is paid into the estate and distributed through the broader estate plan. Whichever path is chosen, the allocations across nominated beneficiaries need to add up to 100%.

The four types of super death benefit nomination

Not every nomination carries the same weight, and not every fund offers every type. Broadly, there are four types of super death benefit nomination:

1. Non-binding nomination — tells the trustee your preference, but doesn't bind them. It doesn't expire, and the trustee makes the final call.
2. Binding lapsing nomination — the trustee must follow it, but it typically expires three years after you sign it. If it isn't renewed, it can revert to non-binding.
3. Binding non-lapsing nomination — binding and stays in place until you change or cancel it, where the fund offers this option under its trust deed.
4. Reversionary nomination — used for a super income stream or pension, where the payments continue to a nominated dependant after you die.

The labels matter, because two of them are only guidance and two of them aren't. A non-binding nomination and a lapsed binding nomination both hand the decision back to the trustee.

The three-year trap that quietly resets a nomination

This is where good intentions tend to come undone. Many people complete a binding nomination, feel the job is done, and never look at it again. But most lapsing binding nominations expire after three years — and once they lapse, the trustee's discretion comes back, sometimes years after the original wishes were set. A power of attorney can't make or renew a nomination on your behalf, so a lapse combined with a loss of capacity can leave no valid nomination at all.

Validity also turns on the paperwork. A binding nomination generally has to be signed and witnessed by two adults who aren't named as beneficiaries, signing at the same time. ASIC has formally warned the advice industry about improperly witnessed or backdated forms, because an invalid form sends the decision straight back to the trustee. Many Australians find it useful to check what type of nomination they hold and when it expires — details a fund usually shows on the annual statement or in the online account.

Is super paid to your beneficiaries taxed?

Whether a super death benefit is taxed depends on who receives it — and the tax rules use a narrower definition of "dependant" than superannuation law does. This catches people out, so it's worth understanding in general terms.

A death benefits dependant for tax purposes includes a spouse, a child under 18, a financial dependant or someone in an interdependency relationship. A lump sum paid to a tax dependant is generally tax-free. A non-tax-dependant — an independent adult child is the classic example — is treated differently: according to the ATO, the taxable component of a lump sum is generally taxed at 15% (plus the Medicare levy) on the taxed element, and 30% (plus the Medicare levy) on any untaxed element. The untaxed element often relates to insurance proceeds.

The mismatch is the thing to hold onto: an adult child can be a valid beneficiary under superannuation law but still face tax as a non-dependant. Where a benefit is paid to the estate, the tax generally follows who ultimately benefits. Tax outcomes depend on individual circumstances, and a registered tax professional can help work through a specific situation.

Frequently asked questions

Does my super automatically go to my estate?

Not usually. Super is held in trust and generally sits outside your estate, so the trustee decides where it goes unless there is a valid binding nomination. You can direct super into your estate by nominating your legal personal representative, but that only happens if you make that nomination.

How long does a binding death nomination last?

It depends on the type. A lapsing binding nomination typically expires three years after it's signed. A non-lapsing binding nomination stays in place until it's changed or cancelled, where the fund offers that option. Non-binding nominations don't expire, but they don't bind the trustee either.

Can I nominate anyone I want to receive my super?

No. Superannuation law limits a nomination to your spouse, your children, someone in an interdependency relationship, a financial dependant, or your legal personal representative. People outside that group can only receive your super indirectly, through your estate.

What happens if I don't make a binding nomination?

The trustee decides who receives your super, guided by superannuation law and the fund's rules. This can take time, particularly in blended families, and ASIC's 2025 review found delays were common across the funds it examined.

A binding death nomination is a small piece of paperwork that does a surprising amount of heavy lifting — it's often the difference between your wishes being followed and a trustee making the call. Because the same nomination also directs any life insurance held in your super, it can be worth seeing those two pieces together; that's part of what Otivo's personal insurance inside super module helps people think through. As a licensed Australian financial advice provider (AFSL and Australian Credit Licence No. 485665), Otivo offers general information like this to help Australians feel more confident about their super and retirement.

Sources

• ASIC MoneySmart — Protecting your superannuation after death, and binding death benefit nomination glossary: moneysmart.gov.au
• ASIC — Report 806, Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve, media release 25-049MR, March 2025: asic.gov.au
• Australian Taxation Office — Paying superannuation death benefits; Taxation of super benefits: ato.gov.au
• Superannuation Industry (Supervision) Act 1993: legislation.gov.au

Disclaimer

The information in this communication is current as at May 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.