Updated 22 October 2026
Wills - Potential Problem #12: Ignoring Beneficiary Designations
Keeping beneficiary nominations up to date is an essential part of estate planning in New South Wales. A carefully drafted will may explain who should inherit your estate, but it does not automatically determine who receives your superannuation or life insurance held inside your super fund.
The practical task is to check both documents together. Your will, the fund’s rules and your death benefit nomination should support the same overall plan. Otherwise, your family may discover that an important asset follows a different path from the one you expected.
Superannuation is generally held by the fund’s trustee rather than owned by you as an ordinary estate asset. The trustee must apply the relevant law, fund rules and any valid binding nomination when deciding how to pay a death benefit. Without a binding direction, the trustee may have discretion.
Eligible recipients can include a spouse or de facto partner, children, financial dependants, people in an interdependency relationship and your legal personal representative. Eligibility must be assessed under the applicable rules. Naming someone in your will does not, by itself, make them eligible for direct payment from your fund.
Check insurance separately too. Life insurance held outside super depends on the policy’s ownership, terms and nominated beneficiaries. Do not assume that one superannuation form also deals with a separate insurance policy.
A binding nomination directs the trustee, provided it satisfies the applicable requirements and remains valid. A lapsing nomination commonly expires after three years. Some funds offer non-lapsing nominations, which have no automatic expiry date but still need review when circumstances change.
A non-binding nomination records a preference; the trustee is not compelled to follow it. A reversionary nomination concerns an eligible beneficiary continuing a pension and requires separate consideration.
Requirements differ between funds and account types. AustralianSuper’s current super-account form, for example, offers lapsing and non-lapsing options and requires two eligible adult witnesses. These are that fund’s requirements, not a substitute for checking your own documents. Self-managed superannuation funds also require close attention to their trust deeds.
A valid binding nomination to your legal personal representative, often abbreviated to LPR, is a way to direct the death benefit into your estate. In this context, the representative is the executor of your will or the administrator of your estate. They receive the money in that official capacity, not as a personal gift.
Once paid into the estate, the benefit is administered under your will or, without a valid will, the intestacy rules. Estate liabilities and relevant claims must also be considered. Update your will before choosing this route: directing super into an estate with unsuitable provisions can simply move the problem.
Use the fund’s required LPR option and wording. Writing the executor’s personal name alone may not communicate that payment is intended for the estate.
“We helped a client make a death benefit nomination naming their legal personal representative. The intention was for the benefit to be paid into the estate, so the executor could administer it under the will.
“I explain it this way: the executor receives the money to do their job for the estate. It is not money we are giving them personally.
“That distinction matters. We need the will and the nomination to work together. Putting the right intention in the will is only part of the job; the super fund also needs the appropriate nomination.”
In Munro v Munro (2015), a dispute arose over a deceased member’s self-managed superannuation fund. His nomination directed the benefit to the “Trustee of Deceased Estate”. His daughters argued that this meant his executors.
The Queensland Supreme Court held that the nomination was not binding under the fund’s trust deed. The deed required an eligible dependant or legal personal representative, and the wording used did not satisfy that requirement. The Court distinguished administering an estate as executor from holding assets as trustee under a will.
The will did not repair the defective nomination. Although this was a Queensland decision, it offers a practical warning for NSW estate planning: precise wording and compliance with the particular fund’s documents matter. A nomination should be checked against the deed and applicable rules, rather than treated as a casual expression of wishes.
Separation, divorce, remarriage and the birth or death of a family member should trigger a review. An ex-spouse does not automatically receive super simply because an old form names them. Their eligibility at death must be checked. A separated but not divorced spouse may remain eligible; after divorce, another qualifying relationship, such as financial dependency, may be relevant.
Payment eligibility and tax treatment are different questions. A financially independent adult child can be eligible to receive super but may not be a death-benefits dependant for tax purposes. Conversely, the tax definition includes a former spouse, which does not itself establish eligibility for direct payment under superannuation law.
Nominating the LPR does not automatically make the benefit tax-free. Tax can depend on the benefit’s components and who benefits, or is expected to benefit, through the estate. Nor does payment into the estate prevent a challenge to its distribution. Consider these consequences with legal and tax advisers before choosing between estate payment and direct beneficiaries.
ASIC’s 2025 review of 10 superannuation trustees found that, at 31 March 2024, 57% of living members in the reviewed funds had no beneficiary nomination. The finding concerns those funds, not every Australian super member. ASIC also found that claims with valid binding nominations were processed faster than claims without them.
A nomination still does not guarantee immediate payment. The fund needs to establish the death, check the nomination and obtain relevant documents. For an estate payment, evidence of the executor’s or administrator’s authority may be required. Keeping records accessible can help the person making the claim.
Step 1: List every fund and policy. Obtain current statements and copies of existing nominations. Check whether each account is in accumulation or pension phase.
Step 2: Confirm the intended destination. Decide who should ultimately benefit, then consider whether direct payment or payment through the estate fits that plan.
Step 3: Complete the correct form. Check recipient eligibility, LPR wording, percentages, signatures and witnessing. Follow the fund’s instructions; do not copy a form from another provider.
Step 4: Lodge it and retain confirmation. Ask the fund to confirm receipt and acceptance where required. Keep the completed form with your estate-planning records and tell your executor where to find it.
Step 5: Set review reminders. Record any expiry date. Review the nomination alongside your will after relationship changes, changing funds or commencing a pension. Do not assume a nomination transfers automatically to a new fund.
A straightforward single will starts from $440 including GST. We confirm your fee in writing before we start. Nomination advice, SMSF documentation, complex estate planning and disputes require separate assessment and are not automatically included in the basic will fee.
Contact CM Lawyers with your current will, super statements and nomination forms so we can identify what needs updating.
MoneySmart — Who gets your super if you die: nomination types, eligible beneficiaries and directing benefits to your estate.
Law Society of NSW — Superannuation death benefit FAQs: the role of an executor or administrator receiving super for an estate.
AustralianSuper — Binding death benefit nomination form: a fund-specific example of nomination options, wording and signing requirements.
legalsuper — Nominating beneficiaries: recipient eligibility and the importance of reviewing nominations after separation.
Munro v Munro (2015): the Queensland judgment explaining why the nomination’s wording failed under the fund’s deed.
Income Tax Assessment Act 1997 — Division 302: tax rules for super death benefits, estate payments and death-benefits dependants.
ASIC — Death benefit claims review (2025): the source of the nomination statistics and claim-handling findings across 10 trustees.
MoneySmart — Claiming a super death benefit: documents, fund checks and practical steps when making a claim.
CM Lawyers — Contact our team: arrange a review of your will and superannuation nomination documents.
Disclaimer: This website provides general information only. Nothing on this site should be taken to comprise legal advice or used as a substitute for detailed and competent legal advice. While the information contained in this website is believed to be accurate and current, it is provided by CMLawyers in good faith on an “as is” basis. CMLawyers, its directors, officers or employees make no representation or warranty as to the reliability, accuracy or completeness of the information contained on this website, and none of them accept any responsibility arising in any way (including negligence) for errors in, or omissions from, the information contained in this website.
