Does My Superannuation Automatically Go to the Person Named in My Will?

This surprises a lot of people:

Your superannuation does not automatically form part of your estate when you die.

That means writing "I leave everything to my spouse" in your Will does not necessarily determine who receives your superannuation death benefit.

So what happens to my super when I die?

Superannuation is generally held in a trust by your super fund.

When you die, the payment of your superannuation death benefit is governed by superannuation law and the rules of your particular fund.

Depending on your circumstances and the arrangements you have in place, the benefit may be paid to an eligible beneficiary or to your Legal Personal Representative, which generally means your estate.

This is where death benefit nominations become important.

What is a binding death benefit nomination?

A valid binding death benefit nomination can direct the trustee of your super fund as to who should receive your death benefit, provided the nominated recipient is eligible under the applicable rules.

Depending on your fund, nominations may also have different requirements and expiry arrangements.

Simply completing a nomination years ago and forgetting about it isn't good estate planning.

What if I nominate my estate?

In appropriate circumstances, you may nominate your Legal Personal Representative.

This can result in the death benefit being paid into your estate and distributed in accordance with your Will.

That may be particularly relevant where your Will contains testamentary trusts or other carefully structured provisions.

But it isn't automatically the best option for everyone.

Tax, family circumstances, asset protection considerations and the terms of your super fund all need to be considered.

What about an SMSF?

Self-managed super funds can add another layer of complexity.

If you have an SMSF, your estate plan should consider more than simply who receives the money.

You also need to consider who controls the fund when you die or lose capacity.

That can involve the SMSF trust deed, trustee arrangements, company constitutions, death benefit nominations and your broader succession plan.

A beautifully drafted Will cannot fix an SMSF structure that hasn't been properly considered.

Your Will and super should talk to each other

One of the biggest mistakes in estate planning is looking at each document in isolation.

Your Will says one thing.

Your super nomination says another.

Your jointly owned property passes somewhere else.

Your life insurance has another beneficiary.

Suddenly, the estate plan you thought you had isn't actually the plan that takes effect.

At Neilson + Co Legal, we look at estate planning as a whole.

That means considering your Will alongside your superannuation, asset ownership and other structures so you understand what is likely to happen when you die.

A Will is important. But a Will alone isn't always an estate plan.