What happens to your super when you die?

March 16, 2018

Death is usually out of our control, but where your super goes is entirely up to you.

One of the first steps to take when setting up your new super account is to name a beneficiary – this is the person that will inherit your super assets if the worst was to happen to you.

You have the option of doing this at a later stage, but keep in mind that naming a beneficiary makes it much easier to divide your superannuation assets upon your death.

The assets that will be paid to your beneficiaries are called a death benefit, and it includes the money in your super account and any insurance payouts.

What types of beneficiaries are there?

Preferred beneficiary

This will guide your superfund’s trustees in deciding whom to pay the death benefit to, but they’re not legally obligated to pay this beneficiary.

Binding beneficiary

This legally binds your fund’s trustees into paying the death benefit to this beneficiary. Binding nominations generally expire every three years unless updated by you.

Reversionary beneficiary

This beneficiary will continue to receive your income or pension payments if you die. Only your spouse or your de facto can be nominated as reversionary beneficiaries, not a legal personal representative. You may not be eligible to nominate a reversionary beneficiary unless you hold a specific type of account with your superfund.

What if I don’t have a beneficiary?

If you haven’t nominated a beneficiary, your superfund will make a decision to pay the death benefit to:

  • a dependent
  • interdependent
  • or estate

Click here to find out more about how superannuation is divided.

The important thing to know about beneficiaries

It’s incredibly important to make sure that you check who your beneficiary is every few years to make sure you’re still happy with who it is. Situations change, and you don’t want your money going to a person that is no longer in your life.

Disputes or complaints about who is paid the death benefit can be made, but it can be a long and drawn-out process, so it’s imperative that you ensure your beneficiaries are updated regularly.

It’s recommended that you review your preferred beneficiaries every three years, or more frequently if you undergo major changes in your life such as marriage, children, divorce, or a death in the family.

How to set up a beneficiary

Naming a beneficiary is easy – you can log into your account on your superfund’s website, and you should see a section or page titled Beneficiaries.

You can select multiple preferred beneficiaries to receive portions of your super assets. If you want to nominate a binding beneficiary, you will have to fill out a form and submit it to your fund.

If you don't find either of these options on your superfund's website, you should contact them for more information.

Now that you know about why it’s so important to elect beneficiaries and how to do so, you’ll be able to handle the process smoothly.

If you don’t know what other steps to take to optimise your superannuation account, you can download our checklist to ensure that you’ve ticked off all the important steps.


Join Our Community

Be the first to be notified of our launch!

Human Financial does not currently offer any financial products. We may do so in the future. When we do, you will be able to find the Product Disclosure Statement (PDS) on our website. You should always consider the PDS in deciding whether to acquire, or to continue to hold, the product. Nothing on this site should be construed as financial advice.

© Human Financial Pty Ltd 2017