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Binding Death Nomination

Blog | Talking wills can be uncomfortable, but is important

Chris Morcom
Partner/Private Client Adviser
11 Nov 2020

Talking about preparing wills can be uncomfortable, especially for those who think they will live forever. But, as inevitable as it is, it can also be unpredictable, so today I’m highlighting some important considerations that may save your family thousands of dollars in tax…not to mention a whole lot of hassle.

As we go through life, we accumulate assets, debts, and responsibilities.  One key responsibility is to ensure that our loved ones are looked after when we die.  Appropriate levels of life insurance are important, but not the topic for today. 

There are two documents every adult should have in place – a Will, and a binding superannuation nomination. 


Your Will tells those who survive you: 

  • Who is charged with the responsibility of administering your estate (your Executor);  
  • Who will receive your assets after paying out debts and meeting funeral costs (called your estate); and  
  • Any final wishes you have in relation to the nature of your burial. 

If you do not have a Will in place, then the laws of intestacy come into play.  These laws differ between States and in short, provide for assets to pass to your living relatives.   

In Victoria, these laws changed on 1 November 2017.  If your estate is worth less than $500,000 then the estate would generally pass to your surviving spouse or partner.  If your estate is more than that amount, and you leave behind children, then they may also share in the estate.  If you leave behind more than one partner, then different rules apply.  If you leave behind no partner or children, then all your estate goes first to: 

  • Your parents 
  • Then siblings 
  • Then grandparents 
  • Then uncles and aunts 
  • Then cousins 

Your estate would pass to the government if you leave behind no living relatives. 

If you don’t have a Will, then your survivors would need to obtain a Grant of Letters of Administration from the Supreme Court to administer your estate in line with the laws of intestacy of the State.  This can often be an extra hassle for your survivors, compared with administering your Will. 

The safest way to avoid uncertainty, and to ensure your assets pass to those whom you wish to benefit, is to make a valid Will. 

Your Will can only deal with assets that you personally own.  It cannot gift assets that you do not own. 

An example might be assets held in your family trust.  You personally do not own those assets and therefore your Will cannot gift them.  Importantly, your Will should pass control of the trust to the appropriate beneficiaries.  Of particular importance is the role of Appointor of the trust (if you hold that position). 

If you own assets jointly with another person, then those assets do not become part of your estate but automatically pass to the surviving joint owner.  Often this is seen with your home or personal bank accounts where they are jointly owned with your spouse. 

Making a Will can be complex. Using the services of an experienced lawyer is recommended to ensure your Will is drafted correctly and directs your assets in line with your wishes. 


Your Will cannot dictate to whom your superannuation benefits are paid.  This is important as your superannuation can have life insurance included which means it could be the largest personal asset you own.   

The payment from your superannuation fund on your death is called a “superannuation death benefit”.  It can only be paid to: 

  • your spouse,  
  • your children,  
  • people with whom you have an interdependency relationship,  
  • people who depend on you financially, or  
  • to your estate. 

If paid to a spouse, or child under 18, the death benefit payment is tax-free.   

If paid to adult children or to your estate, then tax of 17% of the taxable component of your superannuation death benefit would be deducted prior to payment of the benefit. Note that some death benefits can have an Untaxed element that attracts tax at 32% including Medicare. 

Death benefits can be paid either as a lump sum or as a pension.  There are complex rules around the payment of death benefit pensions, so you should obtain advice before considering such options. 

There are three main options to arrange the payment of your superannuation death benefit: 

1. Use a non-binding death benefit nomination 

A non-binding nomination tells the trustee of your superannuation fund to whom you want your benefits paid.  The trustee must take this nomination into account but are not bound to follow it.  Your nomination can only be to your spouse, your children, or your estate. 

2. Use a binding death benefit nomination 

A binding death benefit nomination requires the trustee of your superannuation fund to pay your death benefit in accordance with your nomination.  Again, your nomination can only pay benefits to your spouse, your children, or your estate.  If you don’t have a Self-Managed Superannuation Fund, then your binding nomination would need to be renewed every three years. 

3. Use a reversionary pension 

For those who are already receiving a pension from their superannuation fund, there is the option of electing for that pension to continue being paid to your spouse in the event of your death.   

Reversionary pensions can only be paid to a surviving spouse but have the advantage of leaving assets in the tax-advantaged environment of superannuation for longer.  There are limits on the amount of superannuation pension any one person can have in place, so obtaining advice on such strategies is important. 

The famous saying that nothing is more certain than death and taxes certainly rings true when it comes to arranging your estate. 

To avoid leaving behind a mess for your family to clear up, put in place a Will and make sure you have an appropriate nomination in place for your superannuation.   

If you are unsure about your arrangements, then please call one of our highly qualified advisers to make sure your plans are in place for the future of those you love. 

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.