A number of people wonder if they can leave superannuation to someone in your will. The short answer to this question is no. This can be a big problem if you don’t understand how you can distribute this money to your beneficiaries and erroneously include it in your Will.

Superannuation isn’t considered an asset

For many Australians, their superannuation is their largest cash asset and they look forward to using this money in their retirement. Unfortunately, some people pass away and leave a significant amount of money locked away in their superannuation account. However, despite writing a Will and distributing your assets as you see fit, your superannuation doesn’t actually belong to you, so you can’t include it in your Will.

This is because your superannuation isn’t considered as one of your assets and can’t be included in your estate. Instead, this money is held in a trust and is managed by the trustee of your superannuation fund and it is only the trustee who can distribute the money in your account. They can distribute part of all of your superannuation to you on your request, if you fulfil certain criteria (such as on retirement) and they can distribute this money to your beneficiaries, but not as part of your Will.

superannuation and wills

How can you bequeath your superannuation?

The only direct way to leave your superannuation to the beneficiaries of your Will is to inform your superannuation fund of these beneficiaries. This requires a Binding Nomination that stipulates that your superannuation fund must distribute the money in your account to the nominated beneficiaries.

You can however nominate your legal representative as the beneficiary of your superannuation money, who then can distribute this money according to your Will. So you can actually stipulate in your Will who is to receive the benefits of your superannuation account, nominate your legal representative as the beneficiary with your fund, and then rely on this person to distribute these funds.

Nominate your legal representative as the beneficiary of your super, who then can distribute it according to your Will.

For this latter strategy to work, you must include a superannuation clause in your Will and keep the Binding Nomination and the beneficiaries in your Will up to date. The simpler option is to submit a Binding Nomination to your superannuation fund and the money will be distributed to the named beneficiaries on your death. Speak to a will lawyer to find out more.

Making a Binding Nomination with your superannuation fund

A Binding Nomination must be made with your superannuation fund if you want your money to be distributed to your beneficiaries. Every fund will have forms that need to be completed, usually online, to make it a quick and easy process. This Binding Nomination will only be current for three years, so you need to remember to update it before it expires. So long as your Binding Nomination is current, your super fund will distribute this money to your stated beneficiaries on your death.

superannuation funds

What happens if you don’t make a Binding Nomination?

If you don’t make a Binding Nomination or it has expired at the time of your death, the trustee of your fund has two options. They can either pay all the money directly to your estate or they can decide which of your beneficiaries should receive the money.

Other considerations include any tax that might need to be paid by beneficiaries of your superannuation. Always talk to a legal expert who can advise you to the best course of action for your situation.