What happens to my super if I don't nominate a beneficiary?
If you've got life insurance through your super, chances are you filled out a nomination form once, right at the start, and haven't thought about it since. Maybe you ticked a box during onboarding, or your fund set a default for you. Either way, "I nominated someone once" and "my family will get this money quickly and without a fight" aren't the same thing.
Here's what actually happens if you don't nominate a beneficiary, and why the default option probably isn't doing what you think it is.
So what actually happens if I don't nominate anyone?
If there's no valid nomination on file when you die, the trustee of your super fund decides who gets the money. Not your will. The trustee.
That's not as reckless as it sounds. Trustees can't pick a name out of a hat, they have to pay your death benefit to someone who counts as an eligible dependant under superannuation law. But they still have to go looking for that person, assess their situation, and weigh up who needs the money most, and that takes real time, nowhere near as fast as paying out to someone you'd nominated directly.
So what for me: this is the biggest cost of doing nothing. Not that the money vanishes, it doesn't, but that your family is left waiting while a trustee works out who you'd have wanted, at exactly the time they need certainty (and cash) the most.
Binding vs non-binding nomination super: what's the actual difference?
Binding nomination: you name a person (or people), it's signed, in ink, in front of two witnesses who aren't the people you're nominating. If it's valid, the fund is legally required to pay out exactly as you've instructed.
Non-binding nomination: it's a suggestion. The trustee will look at it, but they still make the final call and can pay someone else entirely if they think that's the right outcome.
So what for me: if you assumed ticking a name during sign-up locked it in, it probably didn't. Most default and group cover nominations are non-binding, which means your fund can legally override your choice.
Wait, nominations can expire?
Yes, and this is the part almost nobody knows. Most binding nominations are also lapsing, meaning they expire after three years and need to be redone. Non-binding nominations usually become non-lapsing, meaning they don't expire, but they also don't come with any prompt to reconsider whether the person you picked years ago is still the right one.
So what for me: a lapsed nomination reverts to the trustee's discretion, exactly as if you'd never made one. So the "set and forget" nomination from your super sign-up is either quietly out of date, or was never binding to begin with. Both leave your family in the same spot: waiting on the trustee.
You also can't nominate just anyone through super. Eligible beneficiaries generally include your spouse (including de facto), your children of any age, financial dependants, and people you're in an interdependent relationship with (broadly, people who live with you and rely on each other day to day). Nominate someone outside that list and the nomination simply isn't valid.
Does my super automatically go to my estate and get sorted out in my will?
No, and this trips people up constantly. Super sits inside a trust structure. The trustee holds it on your behalf while you're alive, and pays it out after you die according to super law, not your will. Your will only takes over if the money is actually paid into your estate, which only happens if you've specifically nominated your legal personal representative (your executor) as beneficiary, or the trustee decides your estate is the best option.
So what for me: if you're relying on "it's all covered in my will," it probably isn't. You can nominate your estate deliberately for extra control (useful if you want conditions attached), but it means going through probate, which is slower, and estates can be contested. A direct nomination to an eligible dependant is harder to challenge once valid, and gets paid out faster.
The tax trap most people don't see coming
Here's where it gets genuinely expensive. Super law (the SIS Act) and tax law don't define "dependant" the same way, and two gaps in particular catch people out. Super law treats a child as a dependant at any age, tax law only treats a child as tax-free up to 18. And super law doesn't recognise a former spouse as a dependant at all, even though tax law would treat a payout to one as tax-free.
Matt walks through exactly this scenario in his deep dive with Phil: nominate a former spouse, trusting them to pass the money on to your adult kids, and on paper that's actually the most tax-efficient route, since a former spouse's payout would be tax-free. The catch is it never gets the chance to work that way. Super law knocks the nomination back before tax rules even come into it, and the trustee redirects the payout, often straight to the adult children instead. That sounds fine until tax time: adult children aren't tax dependants either, so they can be taxed at up to 30% plus the Medicare levy on part of that payout.
So what for me: getting the nomination technically wrong doesn't just risk delay, it can hand a chunk of the payout you planned for your family straight to the tax office instead. If you're trying to route money to someone who isn't a straightforward tax dependant, talk to an adviser and an estate planning lawyer before you sign anything, not after.
What should I actually do about this?
Check your nomination. Find out if it's binding or non-binding, check when it expires if it's binding, and confirm the person you nominated is still who you'd choose today.
It's one form, a couple of pages, and for a binding nomination, two witnesses who aren't the people you're naming. Skye sends a nomination form to every client who sets up life insurance through their super, and it's consistently the thing people mean to get around to and don't.
If your situation involves a blended family, an ex-partner, adult children, or money going somewhere super law doesn't straightforwardly allow, talk it through with an adviser before you fill anything in, rather than finding out afterwards it didn't work the way you intended.
Book a 15-minute call with a Skye adviser to check your nomination is actually doing what you think it's doing.
Quick answers
What happens to my super if I don't nominate a beneficiary?
The trustee decides, based on who qualifies as an eligible dependant under super law. This takes longer than a valid nomination.What's the difference between a binding and non-binding nomination?
Binding legally compels the trustee to pay as instructed, if valid. Non-binding is a guide only, and the trustee can override it.Do binding nominations expire?
Most are "lapsing" and expire after three years. Unrenewed, they revert to trustee discretion.Does my super automatically form part of my estate?
No, unless you specifically nominate your legal personal representative as beneficiary.Will my beneficiary pay tax on my super death benefit?
Tax dependants (spouse, child under 18) generally receive it tax-free. Others, including adult children, can be taxed up to 30% plus the Medicare levy.
This is general information and doesn't take your personal situation into account. For advice on your specific circumstances, book a time with a Skye adviser.
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