For many families, superannuation — often with life insurance attached — is one of the largest sums they will ever pass on. Yet it usually sits outside your will. Here is what that means, in plain English, and how to make sure your super ends up where you intend.
An older couple at their kitchen table reviewing their superannuation and will together while estate planning at home. Photo: royalty-free and copyright-free, sourced from Pexels.
When people sit down to make a will, most assume it deals with everything they own. For one of the biggest assets many families have — superannuation, frequently with a life insurance payout attached — that assumption is usually wrong. Your super is generally not automatically covered by your will.
This catches a lot of people out, and the consequences can be serious: a large sum going to the wrong person, an intended loved one missing out, or a tax bill that could have been avoided. The good news is that it is almost always fixable with the right nomination and a will and estate plan that work together. Here is what every NSW family should understand.
Your superannuation is held in trust by your fund’s trustee. Because of that, it does not automatically form part of your estate — the pool of assets (your home, bank accounts, car and belongings) that your will controls. When you die, the trustee decides who receives your super death benefit, unless you have given the fund a valid, binding direction telling it what to do.
In other words, your will speaks for your estate assets, but your super speaks through your super fund. The two are separate systems, and they only join up if you deliberately connect them.
Superannuation law limits who can receive your benefit directly from the fund. At the time of your death, the people you nominate must be one or more of the following:
This is an important point: you generally cannot nominate someone who is not a dependant — for example a sibling, a parent, a friend or a charity — to receive your super directly. To benefit someone like that, you usually direct your super to your estate (by nominating your legal personal representative) and then deal with it in your will.
Not all nominations carry the same weight. The type you have decides how much say you really have:
The common trap is simple: many people have a nomination that has lapsed, is only non-binding, or was never made at all — which leaves the decision with the trustee. Just as often, an old nomination no longer matches life as it is now.
Who receives your super also affects how much tax is paid on it. A lump sum paid to a tax dependant — such as your spouse, or a child under 18 — is generally tax-free.
But an independent adult child is usually treated as a non-dependant for tax purposes. In that case, the taxable component of the super can be taxed — generally 15 per cent plus the Medicare levy on the “taxed element”, and up to 30 per cent plus the Medicare levy on any “untaxed element” (which often includes life insurance proceeds). For many families, super left to grown-up children is one of the most common places an inheritance is quietly eroded by tax.
Whether a benefit is paid via your estate or directly to a person, and how the whole plan is structured, can change the result. This is general information only — the right answer depends on your circumstances, and it is worth getting legal and financial advice that looks at the tax position together.
New South Wales has a feature that most other states do not. Under the Succession Act 2006 (NSW), the Supreme Court has a notional estate power. In certain circumstances, the Court can treat assets that passed outside the estate — which can include some superannuation death benefits — as if they were part of the estate, in order to satisfy a family provision claim by an eligible person who feels they were left without adequate provision.
The practical takeaway is that even a carefully directed super benefit is not always beyond reach in NSW. It is one more reason to get local advice when you are planning your estate or dealing with one.
Super combined with life insurance is often the single largest sum a family receives when someone dies. When the nomination is wrong, out of date, or missing, the results are very real: the money can go to a former partner, an intended person can miss out entirely, tax can take a bigger slice than necessary, the payout can be delayed by a trustee’s decision, or it can be drawn into a dispute. A few simple checks now can save your family a great deal of stress and cost later.
Michael Campbell Law is a boutique practice in the Hills District, helping families across Baulkham Hills, Norwest, Castle Hill and the wider Western Sydney area. Michael handles every matter personally. We can prepare or review your will and estate plan and make sure it is coordinated with your superannuation, explain the difference between paying a benefit to a dependant and to your estate, and help you structure things sensibly. We also act in and defend family provision claims across NSW.
Super nomination forms are completed with your fund, and the tax detail should be confirmed with your accountant or financial adviser — we are happy to work alongside them so the whole plan fits together. If you would like your will reviewed, or you simply want to check your super is pointing where you think it is, you are welcome to get in touch.
Related reading: Is Australia getting a “death tax”? · Contesting a will in NSW: eligibility, the 12-month limit and costs · Payday super: what every NSW employer needs to know
This article is general information only and not legal, financial or tax advice. It describes the position in New South Wales and is current as at June 2026; superannuation, tax and succession rules can change, and how they apply depends on your individual circumstances. For advice about your situation, please contact a qualified solicitor and your accountant or financial adviser.
Generally no. Superannuation is held by your fund’s trustee and does not automatically form part of your estate, so your will does not automatically control it. It is only covered by your will if it is paid to your legal personal representative (your estate), which usually requires a valid nomination directing it there.
Directly, only to a dependant for superannuation purposes: your spouse or de facto partner, your children of any age, a person financially dependent on you, or a person in an interdependency relationship. You can also nominate your legal personal representative so the benefit is paid to your estate and dealt with under your will. To benefit anyone who is not a dependant, you generally direct the benefit to your estate.
It is a formal, valid nomination that requires your fund’s trustee to pay your super to the eligible people you have chosen. Without a valid binding nomination, the trustee usually has discretion to decide who receives the benefit.
They can. A lapsing binding nomination generally needs to be renewed periodically, often every three years, or it expires. A non-lapsing nomination stays in place until you change it. It is worth checking which type you have and whether it is still current, especially after a major life change.
They might. A lump sum paid to a tax dependant, such as a spouse or a child under 18, is generally tax-free. An independent adult child is usually a non-dependant for tax, and the taxable component of the benefit can be taxed — generally 15 per cent plus the Medicare levy on the taxed element, and up to 30 per cent plus the Medicare levy on any untaxed element. Advice can help manage this.
Sometimes. Under the Succession Act 2006 (NSW), the Supreme Court has a notional estate power that can, in some circumstances, treat assets that passed outside the estate — potentially including some superannuation death benefits — as if they were part of the estate to satisfy a family provision claim.
Wills and estate planning are areas Michael handles personally. Book a free, no-obligation consultation, or send an enquiry, and we will help you check your nomination and make sure your super and your will work together.