Radanov v AFCA: Why Your Will Cannot Protect Your Superannuation

A common misconception among Australian investors is that a Last Will and Testament serves as a universal blueprint for their entire estate. However, as confirmed by the Federal Court in July 2026, one of the most significant assets in many households—superannuation—exists within a legal framework that sits entirely outside the reach of a standard Will. The ruling in Radanov v AFCA [2026] FCA 929 has sent a clear message to estate planners: without specific, binding documentation, the distribution of your superannuation is ultimately at the discretion of the fund trustee and, by extension, the Australian Financial Complaints Authority (AFCA).

The Radanov v AFCA [2026] Precedent

The case of Radanov v AFCA concerned a dispute over a $350,000 superannuation death benefit. Following the death of the fund member, the trustee initially determined that the entire balance should be paid to the deceased's de facto partner. However, the deceased's three adult children from a previous relationship challenged this decision through AFCA. AFCA intervened, setting aside the trustee's initial decision and ordering that the $350,000 be split four ways between the partner and the children.

The Federal Court upheld AFCA's decision, noting that AFCA's role is to ensure the distribution is 'fair and reasonable' in the context of all potential beneficiaries. Because the deceased had not left a valid Binding Death Benefit Nomination (BDBN), the trustee—and subsequently AFCA—had the legal authority to override the deceased's perceived intentions to achieve what the law deems an equitable outcome for all financial dependants.

Why Superannuation is Not an Estate Asset

The reason a Will cannot dictate the flow of superannuation assets lies in the legal structure of the superannuation fund itself. Superannuation is held in a trust. The assets are legally owned by the trustee for the benefit of the member. Upon the member's death, the assets do not automatically flow into the deceased's personal estate. Instead, the trustee must pay the 'death benefit' to one or more 'dependants' as defined by the SIS Act, or to the Legal Personal Representative (LPR) to be dealt with under the Will.

Without a BDBN specifically directing the trustee to pay the benefit to the LPR, the trustee is not bound by the terms of the Will. For many Australian investors, this realization comes too late, leading to protracted legal battles between surviving family members and fund trustees over hundreds of thousands of dollars.

The Shift Toward Non-Lapsing Binding Nominations

Historically, one of the greatest risks in superannuation planning was the 'three-year expiry' rule. Most binding nominations lapsed after 36 months, reverting the benefit to trustee discretion if the member failed to renew it. However, 2026 has seen a major industry shift. Following announcements by major funds like Cbus in August 2026, many providers are moving toward 'non-lapsing' binding nominations.

• Non-lapsing nominations remain valid until revoked or replaced by the member, eliminating the risk of accidental expiry.
• The introduction of streamlined online nomination processes in late 2026 allows for faster updates to estate plans.
• Despite these simplifications, the legal requirements for witnessing remain strict to prevent fraud and undue influence.

Implementing a Defense Against Intervention

To ensure that superannuation assets are distributed according to specific intentions, investors should verify the status of their current nominations. A Binding Death Benefit Nomination is the only instrument that legally compels a trustee to pay benefits to a chosen beneficiary, provided that beneficiary is a legal dependant (spouse, child, or financial dependant) or the estate. In the wake of the Radanov ruling, the presence of a valid BDBN is the primary defense against AFCA intervention and the 'fair and reasonable' redistribution of assets.

As the 2026 valuation year for Division 296 tax concludes, it is also timely to review the tax efficiency of these distributions. With the 15% additional tax on high balances, the choice of beneficiary can have profound implications for the net amount received by the next generation.

Understanding that superannuation operates independently of a Will is the first step in robust estate planning. The Radanov v AFCA case serves as a powerful reminder that the legal landscape prioritizes the specific mechanisms of the Superannuation Industry (Supervision) Act over the general intentions expressed in a Will. By securing a valid, non-lapsing BDBN and accounting for new tax thresholds, investors can maintain control over their wealth transfer and protect their beneficiaries from the uncertainty of trustee discretion.

This article contains general educational information only and does not constitute personal financial, legal, or tax advice. Please consult a licensed professional before making any financial decisions.