Superannuation and Probate in Queensland: What You Need to Know

Disclaimer: This article is for general educational purposes only and does not constitute legal or financial advice. The rules surrounding superannuation and probate can vary depending on the super fund, individual circumstances, and evolving legislation. If you live in Queensland or have multi-jurisdictional assets, always seek professional counsel from a solicitor or financial advisor well-versed in estate and superannuation matters.

When a person dies, their assets—like real estate, bank accounts, and investments—are typically handled through probate or estate administration. However, superannuation often follows different rules, because it may not automatically form part of the deceased’s estate. This guide clarifies how superannuation interacts with probate in Queensland, what happens if you have binding or non-binding nominations, and why it matters for both executors and beneficiaries.

Why Superannuation May Bypass the Estate

Unlike other assets solely held in the deceased’s name, superannuation is generally governed by trust deed rules and superannuation laws, not by standard will or probate procedures:

• Trustee Discretion: The super fund trustee typically decides whom to pay benefits to—often guided by a binding death benefit nomination if it’s valid.
• Not Automatically Estate Property: Super does not necessarily go into the estate unless the beneficiary is the estate itself or the trustee chooses that route.
• Protected from Creditors: Because super sits outside the estate in many cases, it may also be protected from certain estate debts.

Binding vs. Non-Binding Nominations

1. Binding Death Benefit Nominations (BDBN)

A Binding Death Benefit Nomination usually obliges the trustee to pay the superannuation death benefit in line with your expressed wishes—assuming it’s valid and in effect when you die. Key points:

• Lapsing or Non-Lapsing: Some BDBNs last for three years unless renewed (lapsing), while others remain indefinitely (non-lapsing), subject to specific super fund rules.
• Eligible Dependants: Must name legitimate recipients, such as a spouse, child, financial dependant, or your “legal personal representative” (the estate).
• No Trustee Override: If the BDBN is valid, the trustee cannot deviate. This ensures your super goes directly to chosen beneficiaries, bypassing probate if not directed to the estate.

2. Non-Binding or No Nomination

If you have a non-binding nomination or no nomination at all:

• Trustee Discretion: The fund trustee decides who receives the benefit, usually from a spouse, children, other dependants, or the estate.
• Potential Delays: The trustee might request information about the deceased’s dependants to ascertain who is most suitable. This can prolong the payout.

When Super Forms Part of the Estate

Naming Your Estate (Legal Personal Representative) as Beneficiary

If your binding nomination designates “my estate,” the trustee must pay your superannuation to your executor, who then handles it via probate. It becomes part of the estate assets—subject to the will or intestacy rules if no will exists.

Pros:

• Allows integrated estate planning, e.g., if you want to incorporate super into testamentary trusts for minor children.

Cons:

• Creditors of the estate might reach those super funds.
• Could lead to additional family provision claims if the estate is contested.

Trustee Chooses Estate

Even with no explicit instruction, the trustee might pay the death benefit into the estate if they deem it appropriate. The executor then distributes it per the will or intestacy.

Advice: If you specifically want super to go to your estate, a valid binding nomination to “legal personal representative” reduces uncertainty and trustee discretion.

Probate and Estate Administration in Queensland

Do You Need Probate for Super?

Probate is the Supreme Court’s official approval of the will, validating the executor’s authority. But for superannuation:

• If super is paid directly to a dependant (e.g., spouse, financially dependent child), it bypasses probate.
• If paid to the estate, the executor typically obtains probate to handle that fund portion. The super trustee might request the grant of probate before releasing funds.

Family Provision Claims (Succession Act 1981)

In Queensland, certain relatives (spouse, child, dependant) may file a family provision claim if they believe the will inadequately provides for them. If the super went directly to a beneficiary outside the estate:

• The court cannot typically reorder that direct super payout.
• If super is in the estate, a successful family provision claim might alter how estate assets, including super, are distributed.

Tax Considerations

Superannuation is not subject to any direct inheritance tax in Australia, but certain tax implications may arise:

• Tax on Taxable Components: If a non-dependant (e.g., adult child not financially dependent) receives super death benefits, portions of the payout may face tax.
• No CGT at Transfer: Payment of a super death benefit itself does not trigger CGT. However, if the estate receives an asset (like a fund distributing a share portfolio), subsequent sales by the estate might face CGT.

Tip: Understanding potential tax components and who is considered a “death benefits dependant” under the Tax Act is vital. A spouse or minor child often gets a tax-free benefit, while adult children may face some tax on parts of the benefit.

Scenarios and Examples

Scenario 1: Direct to Spouse

John, a Queensland resident, has a binding nomination naming his wife as the sole beneficiary. John dies, and the super fund trustee pays the lump sum directly to her, bypassing the estate. This reduces time and complexity—no probate needed for that sum. His will concerns only the rest of his estate (home, shares). If John had debts, the super remains protected from general estate creditors in most circumstances.

Scenario 2: Non-Binding Nomination, Multi-Children

Carol made a non-binding nomination listing her children. She never updated it after one child became financially independent, another child left on poor terms, etc. The trustee, after Carol’s death, investigates who is a financial dependant. Because no child is clearly dependent, the trustee decides to pay the benefits to the estate, letting the executor distribute them per the will. This process extends the timeframe, and certain children might still dispute the distribution.

Scenario 3: Estate as Beneficiary

Anna nominates her estate, intending to set up testamentary trusts for grandchildren under her will. When she passes, the super trustee sees the valid BDBN naming the “legal personal representative.” The super lumps into Anna’s estate, subject to her instructions in the will. The executor invests in testamentary trusts with potential child tax benefits.

Frequently Asked Questions

1. Must I mention super in my will for it to go to a beneficiary?
Not necessarily. If you have a valid binding nomination to a dependant, that direct nomination overrides will references. If you want super to go to your estate, you typically name the estate (legal personal representative) in the binding nomination.

2. Is a new will needed every time I change super nominations?
No. Super nominations are separate. But coordinate them with your estate plan so they don’t conflict or cause misunderstandings. Update the will if you want super to flow into testamentary trusts or have cross-impact with other estate assets.

3. Can the executor choose how to distribute super?
Only if the trustee pays benefits to the estate. Otherwise, if a valid binding nomination dictates “X gets the benefit,” the executor has no say.

4. Will super always bypass probate?
It can. If super is paid directly to a dependant, it generally bypasses. If directed to the estate, it merges with estate assets, requiring the executor to handle distributions after probate.

5. How do creditors handle super?
As super is typically not estate property, estate creditors may not claim it—unless it’s routed into the estate. However, trust deeds or creditor claims in certain scenarios may vary.

Key Takeaways & Summary

• Superannuation isn’t automatically part of a deceased’s estate in Queensland; it’s subject to fund trustee decisions or valid binding death benefit nominations.
• If super is paid directly to a dependant, it bypasses probate; if paid to the estate, it merges with estate assets—subject to probate and any will instructions.
• Setting or updating binding nominations helps you control who receives your super. Non-binding nominations give the trustee discretion, possibly slowing the payout.
• Family provision claims mainly affect estate assets; direct super payouts might remain unreachable to those seeking extra shares.
• Understand tax implications for adult children or non-dependants receiving super. If the lumpsum heads into the estate, it’s governed by that estate’s distribution plan.

Ultimately, clarifying how you want your superannuation distributed—whether to a spouse, children, or the estate—ensures your wealth is allocated according to your wishes. Aligning super nominations with your Queensland will or trusts fosters a smooth estate settlement, preventing conflicting instructions and potential legal strife.