Who receives a self-managed super fund member's balance after they die is not decided by their will. It is decided by the fund's trust deed, super law and, where one exists, a valid death benefit nomination. With an ageing membership base and a steady stream of rulings and commentary in 2026, nominations have become a recurring question for trustees, and the details may matter more than many expect.

Why death benefit nominations are in focus

According to the ATO's March 2026 quarterly statistics, 85 per cent of SMSF members are aged 45 or older, and total SMSF Assets are estimated at $1.06 trillion. As balances grow and members age, estate planning naturally rises up the agenda.

Death benefits have also been a recurring theme in trade press this year. SMSF Adviser, for example, has reported on several private binding rulings about who qualifies as a death benefits dependant, alongside commentary on whether nominations remain valid.

The ATO itself warns that getting death benefit payments right matters because disputes can lead to costly court action.

How SMSF death benefits are paid

When a member dies, the ATO says trustees are responsible for correctly identifying who should receive the benefit. It is generally paid to a dependant, a nominated beneficiary, or the deceased's legal personal representative for distribution under the will. The ATO adds that death benefits should be paid as soon as possible.

The ATO is clear that the fund's trust deed must be followed, even if it differs from the member's will. Trustees must also consider any binding or non-binding nomination, keep records of their decisions and confirm the nominated beneficiaries are eligible under the deed and super law.

Without a binding nomination, the remaining trustees generally decide how benefits are distributed, within the deed and super law. That can matter where family relationships are complicated.

Binding, non-binding and non-lapsing nominations

A binding death benefit nomination, if valid, directs trustees to pay the benefit to the nominated people. A non-binding nomination indicates the member's wishes, but trustees retain discretion.

For APRA-regulated funds, regulation 6.17A of the Superannuation regulations sets requirements for binding nominations, including that they generally lapse after three years unless confirmed or amended.

In Hill v Zuda Pty Ltd, decided in June 2022, the High Court held that regulation 6.17A does not apply to SMSFs. In practice, this means an SMSF nomination's validity and any lapsing period depend largely on the fund's trust deed.

As a result, SMSFs may permit non-lapsing binding nominations, but only if the deed allows them. Quoted in SMSF Adviser in April 2026, SUPERCentral special counsel Michael Hallinan noted that many deeds automatically adopt regulation 6.17A, including its three-year lapsing rule, and may need amending.

He also pointed out that some deeds do not allow an enduring attorney to make a nomination. If a nomination lapses after a member loses capacity, it may not be possible to renew it.

In the same article, BT's Bryan Ashenden said there are many examples of what can go wrong when nominations are not completed properly.

What the court cases suggest

Hallinan cited Katz v Grossman, a long-referenced case in which a father made a non-binding nomination to split his benefit between his son and daughter. After his death, the daughter, as trustee, exercised her discretion to pay the whole benefit to herself, and her brother's court challenge failed.

The lesson commonly drawn is that non-binding nominations leave control with whoever is Trustee at the time of death, which may not reflect the member's intentions.

Hill v Zuda underlined a different point: for SMSFs, the wording of the trust deed carries great weight. A nomination that does not meet the deed's requirements may not bind the trustees at all.

Tax on death benefits for non-dependants

Who receives a death benefit also affects tax. Under super law, a dependant includes a spouse, a child of any age and a person in an interdependency relationship. Tax law uses a narrower definition, and adult children are generally not tax dependants unless, for example, they were financially dependent on the deceased.

According to the ATO, lump sum death benefits paid to a tax dependant are tax free. Non-dependants can receive only a lump sum, and the taxable component is taxed at a maximum of 15 per cent plus the Medicare levy for the taxed element, or 30 per cent plus the Medicare levy for any untaxed element.

Dependency depends on the facts. In a private binding ruling reported by SMSF Adviser in September 2026, the ATO accepted that an adult child who had relied on a parent's continuous financial support was a death benefits dependant. Private rulings apply only to the person who applied for them.

What trustees may want to consider

Trustees may want to check whether each member has a current nomination, whether it is binding or non-binding and whether it meets the specific requirements of the trust deed, including witnessing and any lapsing period.

Reviewing the deed itself may also be worthwhile, particularly older deeds that may adopt regulation 6.17A or restrict who can make or renew a nomination.

Nominations could also be reviewed after major life events, such as marriage, separation, the birth of a child or a death in the family. Considering how the fund's trustee structure will operate after a member dies may help avoid disputes over who controls the payment decision.

Because estate planning, tax and family circumstances interact, outcomes depend on individual circumstances. Professional advice from an SMSF specialist lawyer or adviser may be appropriate.

The bottom line

Death benefit nominations are one of the main ways SMSF members can influence who receives their super, but their effect depends heavily on the trust deed. The High Court has confirmed that the regulation governing binding nominations in APRA-regulated funds does not apply to SMSFs, placing more weight on deed wording. Tax outcomes also differ between dependants and non-dependants. For trustees, understanding how these rules interact may help reduce the risk of disputes and unexpected tax.