By Philippa Billings, Chief Advice Officer, Otivo
Here's something that surprises a lot of people, your super doesn't automatically follow your will. It's held in trust, and where it goes when you die is decided by your nomination and your fund's trustee, not by your estate by default. That makes the nomination one of the most important, and most overlooked, pieces of paperwork you'll ever complete. Here's how super death benefits actually work.
Quick answer
When you die, your super is paid as a death benefit, but not automatically through your will. Who receives it depends on the beneficiary nomination you've made with your fund, and it can go to eligible dependants or your estate. As at July 2026, death benefits paid to tax dependants are generally tax-free, while those paid to non-dependants may be taxed.
Does my super automatically go to my will?
Not by default. Super is held in trust by your fund, so it sits outside your estate unless it's directed there, which is why it doesn't automatically follow your will. Instead, what happens is governed by the beneficiary nomination you've made with your fund and by the trustee who administers it. This is the single most misunderstood thing about super and death, and it's why simply having a will isn't enough to control where your super ends up.
Who can receive my super death benefit?
Super has its own rules on who can receive a death benefit directly, and they're narrower than a will. Eligible recipients are generally your dependants, which for super purposes can include a spouse or partner, your children, someone financially dependent on you, or someone in an interdependency relationship with you. Alternatively, the benefit can be paid to your estate, through your legal personal representative, to then be distributed. Understanding who qualifies as a dependant is central to making a nomination that actually works.
What's the difference between binding and non-binding nominations?
This is where you take control, or hand it over. A non-binding nomination tells the trustee your preference, but the trustee retains discretion over who ultimately receives the benefit. A binding nomination, if valid, generally requires the trustee to pay according to your instructions, removing that discretion. Binding nominations can be lapsing, needing renewal every few years, or non-lapsing, depending on the fund. Choosing between them is really a choice about how much certainty you want over where your super goes.
How are super death benefits taxed?
The tax depends on who receives it. A death benefit paid to a tax dependant, such as a spouse, is generally tax-free. A benefit paid to a non-dependant, such as an adult child who is financially independent, can have its taxable component taxed. Because the definition of a dependant for tax differs in places from the definition for super law, the outcome isn't always intuitive, and the ATO is the authoritative source for how the tax applies in a given situation.
Why is keeping your nomination up to date important?
Because life changes and paperwork doesn't update itself. Marriage, separation, a new child or the death of a nominated beneficiary can all mean an old nomination no longer reflects your wishes, and a lapsing binding nomination that hasn't been renewed may no longer be valid. Without a valid nomination in place, the trustee generally decides, which may not match what you intended. Reviewing your nomination periodically is a small task that carries a lot of weight.
Frequently asked questions
Does my super go to my next of kin automatically?
Not automatically. It depends on the nomination you've made and the trustee's process, and without a valid binding nomination the trustee generally decides who receives it among your eligible dependants or your estate.
Can I leave my super to anyone I want?
Not to anyone. Super death benefits can generally only be paid directly to eligible dependants or to your estate, which has its own rules on distribution. This is narrower than who you can name in a will.
Is super taxed when it's inherited?
It depends on the recipient. Death benefits paid to tax dependants such as a spouse are generally tax-free, while benefits paid to non-dependants can have their taxable component taxed. The ATO sets out how this works.
Where to from here
Your nomination is a small form with outsized consequences, and it's worth getting right. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a retirement planning module that helps you see the full shape of your super and retirement, based on your age, balance, income and goals, a natural prompt to check your nomination is current. For the nomination itself, your super fund is the place to act.
Sources
- Australian Taxation Office — super death benefits and tax on death benefits — ato.gov.au
- ASIC MoneySmart — what happens to your super when you die and binding nominations — moneysmart.gov.au
Disclaimer
The information in this communication is current as at July 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.