Has your superannuation become a substantial asset? If the answer is YES, this article is important.

Did you know… you cannot gift your superannuation to a family member when you die.

With two exceptions ….

  • if you have a valid binding death nomination the trustee MUST pay superannuation where you direct; or
  • if you are receiving a pension at the time of your death and it reverts to your spouse as a reversionary pension.

You are a member of your superannuation fund.

For the purposes of this article reference to member refers to you.

Superannuation is usually held by:

  • an industry or retail fund; or
  • a self-managed superannuation fund (SMSF).

This article does not address other products such as a defined benefit pension or annuities.

FIRST EXCEPTION: Binding Death Nominations (BDN)

A BDN is a form a member signs that directs the Trustee to pay superannuation on their death to one of the member’s dependants ** or to their legal personal representative (that is, their estate).  A member’s Will governs where superannuation is paid when super is paid to a member’s estate.

Sometimes, BDNs lapse after three years – in which case, the Trustee regains the power to decide where superannuation is paid – unless it is renewed.   This can cause issues if a member is elderly and has lost capacity to make a new BDN.

For retail or industry funds a member must contact their Fund or download the BDN form from the superannuation fund’s website.  It is important to complete and sign the form correctly, otherwise it may be invalid.   Often two witnesses are required to be present when the member signs, much like signing a Will.

BDNs and self-managed superannuation funds (SMSFs)

If a member is also a trustee of the Fund and can make decisions, why is a BDN needed?

There have been many court cases involving SMSFs, BDNs and unhappy family members because of superannuation payments made ”unfairly” or not as anticipated.

The main reason litigation arises is because, on the death of a member, control of the superannuation fund is transferred, or partly transferred to another family member.  Unless one of the two exceptions apply, that family member can decide where superannuation is paid.

If a member wants certainty where their superannuation is paid on death, a valid BDN is essential.  An additional safeguard is to ensure the SMSF is controlled by a family member who will uphold the BDN.

SECOND EXCEPTION: A reversionary pension

A member may commence a pension if they have reached retirement age or have met a condition of release.

A pension is frequently set up so that on the member’s death their pension reverts to the member’s spouse and paid as a reversionary pension.

A reversionary pension has the benefit of (1) the deceased’s pension continuing to benefit their spouse, (2) keeps the capital in the Fund and (3) is tax free.

If a pension is in place and it reverts to a member’s spouse, a BDN is not necessary when the first member dies.

However, on the death of the surviving spouse, a BDN will ensure certainty for payment of the remaining superannuation in the Fund.


If superannuation has become a substantial asset, a member must take appropriate steps with the help of experienced estate planning solicitor to ensure it is paid where a member wants it, like their other assets, on death.

This article is general in nature and must not be relied upon as legal advice.   
** Superannuation can only be paid to a Member’s Dependant or to their Legal Personal Representative
Dependants for superannuation purposes are:
  • Spouse or defacto spouse;
  • Child of member – any age
  • A person with an interdependence relationship with the member. An interdependent relationship exists if two people:
    • Have a close personal relationship;
    • Live together;
    • Provide each other with financial support or domestic support and personal care.