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Superannuation and your Estate – are your children really protected? Lessons from Steele v Host-Plus Pty Limited as trustee for the Hostplus Superannuation Fund [2025] FCA 668

Published on September 1, 2025 by Adelaide RyanAdelaide Ryan

A recent Federal Court decision in Steele v Host-Plus Pty Limited as trustee for the Hostplus Superannuation Fund [2025] FCA 668 (Steele) has put a spotlight on a common and costly misunderstanding – many Australians assume their superannuation will automatically pass to their children when they die. That is often not the case, especially in blended families and where no binding nomination is in place.

In Steele, the Court upheld a decision by the Australian Financial Complaints Authority (AFCA) to allow HostPlus to pay a deceased woman’s superannuation death benefits to her husband, rather than her two adult children. The case is a clear warning that if you do not take active steps in your estate planning, your super may go to someone you did not intend.

What happened in Steele?

The case involved the death of Jennifer Cole. She was a HostPlus superannuation member, survived by:

• Her two adult children, including applicant Michael Steele, and
• Her spouse (and their stepfather), Stephen Cole.

Jennifer had not made a binding death benefit nomination to HostPlus superannuation fund. Instead, HostPlus exercised its discretion and paid the death benefits to Stephen, her spouse at the time of death. Michael Steele challenged the decision, arguing that he and his sibling, as her biological children, were more appropriate beneficiaries.

However, both AFCA and the Federal Court rejected his claim. The Court found no legal error in AFCA’s reasoning. Stephen, as Jennifer’s spouse, qualified as a dependant under the Superannuation Industry (Supervision) Act 1993 (Cth) and the children, being financially independent adults, did not.

Why your superannuation does not follow your Will

Superannuation is held in a separate trust structure. It is not automatically part of your estate unless you make a valid binding death benefit nomination to your fund’s trustee to pay the death benefits to your legal personal representative (your estate).

If you do not nominate, or if your nomination has lapsed or is invalid, your fund’s trustee will decide who receives the death benefits. They are guided by superannuation law, not your Will.

Who can receive your super directly?

The law limits who can receive a superannuation death benefit directly from the fund. Permissible recipients under superannuation law include:

• Your spouse or de facto partner
• Your children (biological or adopted)
• Someone in an interdependency relationship with you
• Your legal personal representative (your estate)

Under tax law, the following persons are ‘dependant’ of the deceased if at the time of their death they were:

• their spouse or de facto spouse;
• a child of the deceased under 18 years old;
• an an interdependency relationship with the deceased
• any other person dependant of the deceased (this means being financially dependent on the deceased for necessary financial support)

In Steele, HostPlus opted to pay the death benefits to Stephen, as Jennifer’s spouse  a clear dependant under both superannuation and tax laws.

Under tax laws, Jennifer’s children were not financially dependent on Jennifer, and so legally speaking Stephen, as Jennifer’s spouse, had more superior claim.

Lessons for your estate plan

This case is a textbook example of what can go wrong when superannuation is left out of the estate planning process. Here is how to avoid the same pitfalls:

1. Make a binding death benefit nomination

A binding nomination instructs your super fund’s trustee exactly who to pay when you die. Without one, your fund’s trustee has discretion and that can lead to surprises. Most funds allow you to nominate dependants or your legal personal representative (your estate).

It is important to check expiry dates as some binding nominations often lapse after a period of time. You should always ensure your nomination reflects your current family and relationship status.

2. Be clear about who counts as a dependant

Spouses are almost always eligible. Children may not be, especially if they are over 18 and financially independent. If you want your super to go to someone who does not qualify as a dependant, you must:

• Nominate your legal personal representative of your estate to receive the death benefits, and
• Deal with the death benefits through your Will

This gives you more control over who ultimately receives it.

3. Understand the tax consequences

Super paid to dependants (such as spouses or financially dependent children) is generally tax free. Super paid to adult, financially independent children is often taxed. Good estate planning can help reduce this tax.

4. Keep everything up to date

As life changes — marriages, divorces, adult children gaining independence — your estate planning should evolve too. You should continually review:

• Your super death benefit nomination
• Your Will
• Any interdependency or support arrangements

What the Court said

Justice Halley found that AFCA had properly considered the relevant legal principles and made a rational decision. The Court did not find any legal error in AFCA’s approach and that meant the decision stood. The Court confirmed that its role was limited to reviewing for legal error, not deciding whether AFCA made the best or most fair decision in the circumstances.

This decision highlights just how easily superannuation can end up somewhere unexpected — even within families. Many people assume their children will automatically receive their super, but that’s not always the case. To ensure your intentions are honoured, it’s important to make a valid binding death benefit nomination, keep your estate plan up to date, and seek advice that considers the specifics of your family structure. Carroll & O’Dea Lawyers can assist you in reviewing your superannuation arrangements, preparing binding nominations, and making sure your Will and estate plan work together to protect the people you care about most.

This article was published on 1 September by Carroll & O’Dea Lawyers and is based on the relevant state of the law (legislation, regulations and case law) at that date for the jurisdiction in which it is published. Please note this article does not constitute legal advice. If you ever need legal advice or want to discuss a legal problem, please contact us to see if we can help. You can reach us on 1800 059 278 or via the Contact Us page on our website.