Superannuation – Binding Death Nominations

The Federal Court of Australia in an important decision has upheld a decision of the Superannuation Complaints Tribunal to pay superannuation benefits equally to children of the deceased notwithstanding significant factors in the history of the family and in particular that the deceased and his two sons had entered into a settlement agreement by which they renounced any interest in any superannuation accounts held by him.


Mr Mandy died in 2011 and was survived by three adult children, a daughter and two sons.

Mr Mandy was a member of a superannuation fund. Whilst the deed provided for a member to make a binding death benefit nomination he had not done so. In those circumstances the trust deed provided that the trustee must apply the death benefit to one or more of the deceased’s dependents in such proportions as the trustee determines.

Mr Mandy had substantial death benefits in two policies and each of his children were “dependents” within the meaning of the trust deed.
The trustee determined to pay each of the adult children a third of death benefits.

The daughter appealed the decision to the Superannuation Complaints Tribunal who affirmed the trustee’s decision.
An appeal was made to the Federal Court.

The Federal Court noted the decision of the tribunal as including the following:

  • First, superannuation is not an asset of the estate and the trustee is not bound to follow the directions of a will.
  • The complaint to the tribunal concerned the distribution of the death benefit.
  • Although the trustee may look at the deceased member’s will and any other documents to identify the wishes of the deceased member the trustee’s role is not to resolve any perceived or real issues in the deceased’s estate.
  • The tribunal concluded that as there were dependents and with no binding nomination that it was not unreasonable for the trustee to follow its normal practice and pay equally to the dependents.
  • The appellants argued that the tribunal failed to give adequate consideration to the fact that in 1995 the deceased and his two sons had entered into a settlement agreement by which they disclaimed any interest in any superannuation accounts held by him.
  • One of the significant findings in the appeal, and which contributed to the failure of the appeal, was that the tribunal was required to make its own decision. It was under no obligation to have regard to the processes of reasoning which led to the trustee’s decision in the first place to determine the distribution to be made.
  • Perhaps even more galling for the daughter was the fact that the deceased had fallen out with his sons in relation to a business and that the settlement agreement saw his sons receive substantial assets.


The case again highlights the often misunderstood nature of superannuation. Many clients in making a will assume that superannuation benefits, including the benefits of life policies held within their superannuation, will be assets that they can pass on to their nominated beneficiaries in their will.

The truth is, quite clearly, that superannuation benefits do not form part of the deceased’s estate.

The case is important therefore for reminding will makers holding superannuation accounts that the superannuation trustee has a very broad discretion to determine how to distribute the superannuation account and death benefits and that there are very limited grounds for appeal against the trustee’s exercise of its discretion.

Accordingly it critical that clients with superannuation make a binding death nomination as a part of their planning, and also remember to revive the nomination if required.

Author: Peter Wilson

Published: 11 May 2016


The information in this article is general in nature and is not to be relied upon as legal advice. As always, we recommend you seek thorough legal advice to consider your own circumstances and determine whether the information contained in this article is applicable to you.  This article is current as at the date of publishing but will not be updated as circumstances change.