When someone passes away, their superannuation, including any life insurance held inside the fund, does not automatically form part of their estate. Instead, a super death benefit is paid out by the fund’s trustee, and disputes often arise over who should receive it and how much. Roche Legal helps families across Queensland claim and contest superannuation death benefits on a No Win No Fee basis.
A superannuation death benefit is different to a wrongful death or dependency claim. It is not about proving that someone was at fault for the death, the benefit is triggered by the death itself, from any cause. The issues are usually about who is entitled to the money and whether the trustee has distributed it correctly.
What Is a Superannuation Death Benefit?
A death benefit is the balance of a person’s superannuation account plus any life insurance (sometimes called ‘death cover’) held within the fund. Many people have significant life cover inside their super without realising it. When the member dies, the trustee must pay this benefit to eligible beneficiaries in accordance with superannuation law and the fund’s rules.
Who Can Receive a Death Benefit?
Superannuation death benefits can generally only be paid to a ‘dependant’ under superannuation law, or to the deceased’s legal personal representative (their estate). Dependants can include:
- a spouse or de facto partner (including same-sex partners)
- children of any age
- a person in an interdependency relationship with the deceased
- a person who was financially dependent on the deceased
Binding and Non-Binding Death Benefit Nominations
One of the biggest factors in who receives a death benefit is whether the member made a death benefit nomination, and what type. A valid binding nomination directs the trustee to pay the benefit to the people named, as long as they are eligible. A non-binding nomination is only a guide, and the trustee still decides who receives the benefit. Nominations can also lapse, be incorrectly completed, or become invalid, and these are some of the most common reasons death benefit disputes arise.
A nomination can generally only be made in favour of a dependant under superannuation law or the deceased’s legal personal representative (the executor or administrator of the estate). If you believe a nomination is invalid, out of date, or was made under pressure, you may be able to challenge how the benefit is paid.
When Do Death Benefit Disputes Arise?
Disputes commonly arise when the deceased did not make a valid binding death benefit nomination, when a nomination has lapsed or is defective, when more than one person claims to be a dependant, or when the trustee’s proposed distribution seems unfair. In these situations the trustee has a discretion about who to pay, and that decision can often be objected to or reviewed.
If the trustee also declines to pay life insurance held within the fund, for example, by disputing the cause of death or the terms of the policy, that decision can also be challenged.
How Death Benefit Disputes Are Resolved
If you disagree with how a trustee proposes to pay a death benefit, there is a defined process to challenge it:
- Object to the trustee. When a trustee issues a notice of its proposed decision, you usually have only a short time to lodge a written objection.
- Internal dispute resolution. If you remain unhappy, you can make a formal complaint to the fund, and the trustee must provide a final decision within 90 days.
- Complain to AFCA. If the trustee’s final decision still stands, you can take the dispute to the Australian Financial Complaints Authority (AFCA), the free external body that reviews superannuation death benefit decisions.
- Court. In limited cases, a decision can be challenged further in court.
Getting advice early, ideally as soon as you receive the trustee’s notice, gives you the best chance of a fair outcome. If you have received a trustee’s notice or believe you may be entitled to a benefit, contact Roche Legal to discuss your options.
Time Limits: Why You Need to Act Quickly
Superannuation death benefit disputes have some of the strictest time limits in law, and missing one can permanently end your right to claim. As a general guide, you usually have around 28 days to object after the trustee notifies you of its proposed decision, and only 28 days to lodge a complaint with AFCA after the trustee’s final decision. These deadlines are rarely extended, so it is important to seek advice as soon as you are notified, or as soon as you believe you may be entitled to a benefit.
Tax on Superannuation Death Benefits
How a death benefit is taxed depends on who receives it. A benefit paid to a tax dependant, such as a spouse or a child under 18, is generally tax free. A benefit paid to a non-tax dependant, such as an independent adult child, can have its taxable component taxed at 15 per cent plus the Medicare levy. Because the superannuation and tax definitions of a dependant are different, who receives the benefit can significantly affect how much they actually keep, which is another reason these claims are worth getting right.
Superannuation Death Benefits vs Dependency Claims
It is important not to confuse a superannuation death benefit with a dependency (wrongful death) claim. They are different claims, and after a single death both may be available at the same time.
- A superannuation death benefit claim is about the deceased’s own super and any insurance held in their fund. It does not depend on anyone being at fault, and can be claimed no matter how the person died.
- A dependency claim is compensation from the person or company whose negligence caused the death, such as a fatal car accident, workplace incident, or medical error. It usually requires fault to be established.
If your loved one died in an accident caused by someone else, you may be able to pursue both at the same time. Learn more about dependency and wrongful death claims.
How Roche Legal Can Help
We help eligible dependants lodge death benefit claims, respond to and object to trustee decisions, and escalate disputes to the Australian Financial Complaints Authority (AFCA) or the courts where necessary. We also assist executors and administrators dealing with super as part of a deceased estate. Because these matters sit alongside our TPD and life insurance work, we understand how superannuation and insurance interact.
Frequently Asked Questions
Not automatically. Super, including any life insurance held in the fund, is paid by the trustee. It only forms part of the estate if it is paid to the legal personal representative, or directed there by a valid binding nomination.
Generally only a dependant under superannuation law, being a spouse (including a de facto partner), a child of any age, an interdependent or a financial dependant, or the deceased’s legal personal representative.
A valid binding nomination must be followed by the trustee. A non-binding nomination is only a guide, and the trustee decides who receives the benefit.
Time limits are strict. You generally have about 28 days to object to the trustee, and 28 days to complain to AFCA after the final decision. They are rarely extended, so act quickly.
Possibly. An adult child can be a dependant under superannuation law and may receive a benefit, but is usually not a tax dependant, so tax may apply. Whether they receive it depends on any nomination and the trustee’s decision.
It depends. Benefits paid to a tax dependant, such as a spouse or a young child, are generally tax free, while benefits paid to a non-tax dependant can be taxed.
We act on a No Win No Fee basis for these claims, so you can find out where you stand without any upfront cost.
Get a Free Initial Consultation
It costs nothing to find out where you stand. If you believe you may be entitled to a loved one’s superannuation death benefit, or a trustee’s decision has left you out, call our Brisbane team on 1300 335 334 for a free, no-obligation discussion.