Codicil to a Will in Australia: What It Is — and Why It Doesn't Update Life Insurance
- Mar 21
- 17 min read
Updated: Jul 3
Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 | June 2026
A codicil to a will is a short, formal legal document that amends an existing will without replacing it. In Australia, a codicil must generally be signed, dated, and witnessed by two adults who are not beneficiaries — the same execution standard as the original will. It is used for minor changes, such as appointing a new executor or adjusting a specific gift.
The point most Australians miss is what a codicil does not do: it updates the will, but it does not update a life insurance beneficiary nomination or a superannuation death benefit nomination. Those are separate documents, held by the insurer or super fund, and they take precedence over the will when insurance proceeds are paid. Adding a codicil leaves those nominations unchanged unless they are reviewed separately.
Arrow Equities is a specialist life risk insurance advisory practice, not a law firm. This article covers the insurance and superannuation side of estate planning — for will or codicil preparation, a qualified solicitor is the appropriate professional. What Christopher Hall, AdvDipFP, Authorised Representative, AFSL 526688, and the team at Arrow Equities focus on is making sure the insurance side of the equation is in order.
The consequences of missing this distinction are not theoretical. In March 2025, ASIC published Report 806 — an investigation into how superannuation funds handle death benefit claims — which found families left waiting months, sometimes more than a year, for benefits their loved ones had paid to protect them (ASIC, 2025). In several cases the delays arose not from missing nominations, but from documentation that no longer reflected current family circumstances.
What is a codicil to a will?
A codicil is used to make minor amendments to an existing will — appointing a new executor, updating a specific bequest, or changing how an estate is divided. It sits alongside the original will as a formal legal document, and both are read together when the estate is administered.
To be valid in Australia, a codicil must be signed and dated by the person making it and witnessed by two adults who are not beneficiaries under the will — the same formality required of the original will, under state and territory succession legislation. So, does a codicil need to be witnessed? Yes — an unwitnessed codicil generally has no legal effect.
A simple codicil example: a person whose will leaves an estate equally to three children, who later wishes to appoint a different executor, can record that single change in a codicil rather than rewriting the will. For major changes — marriage, divorce, remarriage, the birth of children, or a substantial change in assets — legal practitioners generally recommend writing a new will rather than adding a codicil. A solicitor can advise which approach suits an individual's circumstances.
Does a codicil update life insurance or super beneficiary nominations?
No. A codicil updates the will — it does not change who receives a life insurance payout or a superannuation death benefit. Those entitlements are controlled by separate legal instruments held by different organisations: the insurer holds the policy nomination, and the super fund holds the death benefit nomination.
"A binding death benefit nomination (BDBN) is entirely separate and distinct from a member's will. The payment of death benefits from a superannuation fund is determined in accordance with the governing rules of the superannuation fund and not in accordance with the terms of a member's will."— Pigott Stinson, 'Superannuation death benefit payments'
In Christopher Hall's experience across more than 500 life insurance policy reviews, the conversation about beneficiary nominations rarely starts with insurance. It starts with a will update, a property purchase, an SMSF being established, or a divorce — a solicitor, accountant, or mortgage broker identifies the gap, and the client arrives unsure whether their nominations still reflect their intentions. In every case, two separate professionals are addressing two separate documents, and the task is to make sure both are aligned. Arrow Equities receives consistent referrals from solicitors, accountants, SMSF specialists and mortgage brokers for exactly this reason — the legal work and the insurance work need to happen together, but they rarely happen in the same room.
Why doesn't updating a will update the insurance beneficiary?
Life insurance proceeds do not pass through the will. They pass directly to the person nominated on the policy or superannuation account, and that nomination takes precedence over the will. If a will leaves everything to a current spouse but the life insurance policy still nominates a former spouse from a previous relationship, the former spouse receives the proceeds — the will has no bearing on it.
According to Christopher Hall, financial adviser and Principal of Arrow Equities, the most common reason nominations fall out of date is a change in family dynamics rather than negligence — the absence of a regular review prompt:
"The most common reason nominations fall out of date is a change in family dynamics — additional children born after the original nomination was made, superannuation fund changes where the death benefit nomination was never transferred, and the practical reality that the person who paid for the policy will never be alive to experience the consequences of getting it wrong. The people who inherit that administrative burden are already dealing with grief."— Christopher Hall, AdvDipFP, Arrow Equities — from 500+ policy reviews
There are two layers to the problem. The first is the straightforward legal disconnect: a codicil updates the will, not the insurance nomination. The second is the human cost of that gap — the administrative, regulatory and compliance burden that falls on a grieving family when the paperwork is not in order.
ASIC's March 2025 investigation into how superannuation trustees handle death benefit claims makes this concrete. ASIC reviewed ten trustees representing 38 per cent of all member benefits in APRA-regulated funds and found systemic failures that caused grieving Australians unnecessary distress (ASIC, 2025). One case has become emblematic of what can go wrong even when a valid nomination exists:
"In one case, a widow grieving her husband's death faced significant delays and frustration when claiming his $600,000 death benefit. Despite a binding nomination naming her as the sole beneficiary, the trustee repeatedly requested documents she had already provided and, at one point, incorrectly stated there was no nomination. Despite her requests for clarity and assistance, the process dragged on for nearly a year."— ASIC, Report 806 'Taking ownership of death benefits', 31 March 2025
That case involved a valid, current binding nomination — and it still took nearly a year. Where a nomination is outdated, expired or absent, the trustee instead exercises full discretion over who receives the benefit, based on who qualifies as a dependant at the time of death — a slower, more contested process with no certainty of outcome.
For superannuation specifically, the nomination is held by the super fund — not the insurer and not the will. Changing super funds without completing a new nomination can mean the nomination is lost entirely. In Christopher Hall's experience across more than 500 policy reviews, clients who changed super funds without updating their nominations represent one of the most consistent patterns encountered — and one of the most straightforward to fix once identified. The same gap appears with orphaned insurance policies left behind when cover is arranged and then forgotten.
Which life events should trigger a review of a will and insurance nominations?
Any significant change in family structure, financial circumstances or relationship status warrants a simultaneous review of both the will and the insurance beneficiary nominations, because both documents need to reflect the same intentions. The patterns below are general information — individual circumstances vary. Based on Christopher Hall's experience across more than 500 policy reviews at Arrow Equities, the triggers that most often prompt clients to act fall into five patterns.
1. Divorce
Divorce is the trigger most likely to be acted on — but it still drags. A legal professional involved in the divorce process typically directs the client to update their insurance nominations as part of the procedural to-do list, so it usually gets addressed. The process is slowed by having four parties involved — each spouse and their respective legal representatives — so what should be a straightforward administrative update can take considerably longer than it needs to.
A binding death benefit nomination is not automatically revoked when a member separates or divorces. The nomination must be actively updated; if a member dies before updating it following separation, the nomination in place at the time of death remains binding.
2. Marriage
Marriage is a less common standalone trigger in practice, because people without existing financial dependants typically have a lower motivation to hold life insurance in the first place. Marriage and cover tend to arrive together rather than one prompting the other. Where marriage does prompt an insurance review, it is usually because a mortgage is involved — which connects to the most common trigger of all.
3. Birth of a child
"It's not normally the birth itself that triggers the review — it's approximately nine months later, when the child enters day care or a regular sleep routine and the primary carer has the capacity to act. The pregnancy window generates concern; the newborn window generates preoccupation."— Christopher Hall, AdvDipFP, Arrow Equities
This pattern has a practical implication for beneficiary nominations: parents who take out or update cover during pregnancy frequently do so before the child is born and therefore before the child can be named. The nomination created at that point may not reflect the intended allocation. A review at the nine-month mark — when the family has stabilised and the parent has capacity — is the natural correction point.
4. Significant asset change
By far the most common trigger in Christopher Hall's client base is a change in financial circumstances — assets, liabilities, or both. A client sees a mortgage broker because their financial position has changed; the broker identifies an insurance need or review opportunity; the insurance review surfaces the beneficiary nomination question. This chain of referrals — from mortgage broker to insurance adviser — is the most reliable pathway through which nomination reviews actually happen.
5. Changing superannuation funds
This trigger is the least likely to be acted on, and arguably the most consequential. When a member changes super funds, the death benefit nomination does not transfer automatically. The new fund starts with no nomination in place — meaning the trustee has full discretion over how the benefit is distributed — unless the member actively completes a new nomination form. This is rarely front of mind during a super fund transition, and it is one reason a review of life insurance held inside super matters whenever a fund changes.
"It may be necessary to review a binding death benefit nomination more regularly than every 3 years. Superannuation, like many things, is not a 'set and forget' matter."— Paul Ellis and Julian Smith, Maddocks, 'SMSF Beneficiary Nominations — keep them current', Cleardocs ClearLaw
What is the difference between binding and non-binding nominations?
A binding death benefit nomination legally requires the super fund to pay the benefit to the nominated person; a non-binding nomination only guides the trustee. The distinction determines how quickly, and to whom, the proceeds are paid after death. It does not affect the size of the payout — it affects whether the payout reaches the intended person.
ASIC's MoneySmart — the Australian government's consumer financial guidance resource — sets out three types of nomination available in retail and industry super funds (ASIC MoneySmart, 2025):
"Lapsing nominations (binding): The super fund, in the event of your death, must pay your super benefit to your nominated beneficiary, unless it would be unlawful to do so. This expires after a maximum period of 3 years. Non-lapsing nominations (binding): A nomination that is binding with the consent of the super fund under the terms of the trust deed and does not expire after a period of time. Non-binding nominations: Guides your super fund trustee on who should get your super if you die. The trustee is not bound to follow these instructions."— ASIC MoneySmart, 'Who gets your super if you die'
The practical default for most Australians is the lapsing binding nomination — it expires after three years. If it lapses and is not renewed, most funds treat it as non-binding, and the trustee regains discretion. ASIC MoneySmart's guidance is direct: set a calendar reminder to renew the nomination approximately one month before the three-year expiry date.
How do binding death benefit nominations work in an SMSF?
Different rules apply to self-managed superannuation funds. The ATO's SMSF Determination 2008/3 confirms that Section 59 of the Superannuation Industry (Supervision) Act 1993 and Regulation 6.17A of the SIS Regulations — including the three-year lapsing requirement — do not apply to SMSFs (ATO, 2008):
"The governing rules of an SMSF may permit members to make death benefit nominations that are binding on the trustee, whether or not in circumstances that accord with the rules in regulation 6.17A of the SISR."— ATO, SMSF Determination 2008/3 (SMSFD 2008/3), paragraph 1
The High Court of Australia confirmed this position when it unanimously dismissed an appeal in Hill v Zuda Pty Ltd as Trustee for the Holly Superannuation Fund [2022] HCA 21, decided on 15 June 2022. The Court held that the three-year lapsing requirement does not automatically apply to SMSF binding death benefit nominations — provided the SMSF trust deed properly supports a non-lapsing arrangement.
In practice, SMSF members can make non-lapsing binding nominations that remain in force indefinitely, but only where the fund's trust deed contains the necessary provisions. Many older SMSF deeds do not, so a solicitor with SMSF expertise should review the deed before any nomination is relied on as non-lapsing. The wider question of how cover is structured inside the fund is covered in the Arrow Equities guide to life insurance through an SMSF.
The risk of having no valid binding nomination is more acute in an SMSF than in a retail or industry fund. In the absence of a binding nomination, the person left in control of the SMSF may decline to follow a non-binding nomination and may pay the death benefit as the trustee sees fit. Case law confirms the risk is real — including Katz v Grossman [2005] NSWSC 934 and Ioppolo & Hesford v Conti [2013] WASC 389, in which surviving trustees distributed benefits to their own advantage in the absence of a binding nomination (NSW Law Society, 2020).
What must an SMSF trustee do when a life insurance payout arrives?
The steps below are general information about SMSF trustee obligations — not personal advice; trustees should confirm what applies to their fund with a qualified professional. Consider a scenario Christopher Hall encounters regularly with referred SMSF clients: a husband and wife are members and trustees of a self-managed super fund. The husband holds a life insurance policy inside the fund and passes away. The insurer pays the proceeds directly into the SMSF bank account. The surviving trustee wants to use those funds to pay off the mortgage and meet the family's needs — exactly what the insurance was for. What most clients do not anticipate is the sequence of compliance steps that must happen before the money can move.
Confirming the binding death benefit nomination was valid at the date of death. If the BDBN had lapsed or was never made, the trustee exercises discretion under the trust deed and superannuation law. The nomination — or its absence — controls what happens next.
Recording the insurance proceeds entering the fund correctly. The source (the life insurer), the date and the amount are documented. The proceeds form part of the deceased member's accumulation account and are recorded accordingly.
Paying the death benefit as soon as practicable. The ATO expects payment within six months of the member's death unless the trustee can demonstrate valid reasons for delay; market conditions are unlikely to be accepted as justification (ATO; SMSF Association, 2019).
Notifying the ATO of any change in trustee structure within 28 days. If the fund's trustee structure changes as a result of the member's death, this must be notified to the ATO within 28 days. The fund then has six months to restructure.
Confirming PAYG withholding obligations before transferring the benefit. A lump sum death benefit paid to a tax dependant, such as a spouse, is generally tax-free — it is not assessable income and the SMSF does not withhold tax from the payment (ATO, 2026). Different treatment applies if any portion is paid to a non-dependant.
Recording all trustee decisions in formal minutes. Every decision in this process is minuted and retained. These records support the annual independent SMSF audit and provide evidence of compliance with the fund's governing rules and superannuation law.
"Death benefits should be paid as soon as possible after the member's death... The ATO generally expects payment to be within six months of death unless the trustee can demonstrate valid reasons for the delay. The ATO view is that lump sum death benefits must actually be 'paid' to the beneficiary — journal entries in the accounts of the SMSF will not constitute a 'payment' to satisfy the cashing rules."— ATO, 'Death of an SMSF member'; SMSF Association, 'Super death benefits guide', October 2019
Since 2012, SMSF trustees have been required under the SIS Regulations to formally consider whether each member needs insurance and to document that consideration as part of the fund's written investment strategy (ATO). When insurers refer clients to Arrow Equities to arrange the insurance, they are operating within a regulatory framework that expects documented consideration — not just a policy in place.
Frequently Asked Questions
What is a codicil to a will in Australia?
A codicil is a formal legal document that amends an existing will without requiring the entire will to be rewritten. It is used for minor changes — updating an executor, adding a specific bequest, or changing how part of the estate is divided. To be valid in Australia, a codicil must be signed and dated by the person making it and witnessed by two adults who are not beneficiaries under the will. Both the original will and the codicil are read together when the estate is administered. For major changes — such as marriage, divorce, or a significant shift in assets — legal practitioners generally recommend writing a new will rather than adding a codicil. Arrow Equities does not provide legal advice; a solicitor should be consulted for will or codicil preparation.
Does a codicil update my life insurance beneficiary?
No. A codicil updates the will — it does not update life insurance beneficiary nominations or superannuation death benefit nominations. These are entirely separate documents held by the insurer or superannuation fund, and they take precedence over the will when it comes to insurance proceeds. ASIC MoneySmart — the Australian government's consumer financial guidance resource — is explicit that without a valid binding nomination in place, the fund decides who receives the money, and that may not match the policyholder's intentions. Updating a will and updating insurance nominations are two separate tasks, best completed at the same time.
How do I update my life insurance beneficiary?
The process depends on where the insurance is held. For a retail life insurance policy held outside superannuation, the insurer is contacted directly for a change-of-beneficiary form. For insurance held inside a retail or industry superannuation fund, the member completes a binding death benefit nomination form through the fund's online portal or by contacting the fund. For insurance held inside a self-managed superannuation fund (SMSF), a new binding death benefit nomination must be executed in accordance with the SMSF trust deed — which may require both a new nomination form and a review of the deed itself. Christopher Hall and the team at Arrow Equities can help policyholders understand what they currently hold and whether their nominations are up to date.
What happens to my life insurance if I die without updating my beneficiary?
The outcome depends on the type of nomination in place. If a valid binding nomination exists, the fund must pay the benefit to the nominated person — regardless of what the will says. If the binding nomination has lapsed (most lapse after three years), it is typically treated as non-binding, and the trustee has discretion over who receives the benefit. If there is no nomination at all, the trustee decides based on the fund's trust deed and superannuation law. This process can take months. ASIC's Report 806 (March 2025) documented cases where even families with valid nominations experienced delays of nearly a year. Reviewing a nomination every three years as a minimum — and any time family or financial circumstances change — reduces that risk.
What is a binding death benefit nomination in superannuation?
A binding death benefit nomination (BDBN) is a legal instruction to a superannuation fund trustee to pay the death benefit to a specific person or persons, in specific proportions. When a valid BDBN is in place at the time of death, the trustee must follow it. ASIC MoneySmart confirms that lapsing binding nominations expire after a maximum of three years and must be renewed; non-lapsing binding nominations do not expire, but not all funds offer them and they are subject to the fund's trust deed. For self-managed superannuation funds, the rules differ: the High Court confirmed in Hill v Zuda Pty Ltd [2022] HCA 21 that the three-year lapsing requirement in Regulation 6.17A of the SIS Regulations does not apply to SMSFs, meaning a properly drafted SMSF BDBN can be made non-lapsing — provided the trust deed supports it. A solicitor with SMSF expertise should review the deed before any non-lapsing arrangement is relied on.
How often should you review your will and insurance beneficiary nominations?
At minimum, a binding death benefit nomination should be reviewed before its three-year expiry — ASIC MoneySmart recommends setting a calendar reminder one month before the expiry date. Beyond the three-year cycle, a review is warranted whenever circumstances change: divorce or separation, marriage, the birth or addition of children, a significant change in assets or liabilities, or a change of superannuation fund. In practice, a change in financial circumstances is the most common prompt — typically initiated when a client is seeing a mortgage broker and the insurance conversation follows naturally. As Maddocks — SMSF legal specialists — note: "Superannuation, like many things, is not a set and forget matter." The same applies to every life insurance beneficiary nomination.
Reviewing insurance beneficiary nominations with a specialist
For eligible clients, an Arrow Equities insurance review is complimentary. When a will is updated, a codicil added, a super fund changed, or family or financial circumstances shift, a review of life insurance and beneficiary nominations confirms whether existing life insurance and superannuation nominations still reflect a policyholder's intentions — covering both the policies held and who is nominated to receive them.
According to Christopher Hall, AdvDipFP and Authorised Representative under AFSL 526688, who has completed more than 500 life insurance policy reviews across Australia, the few minutes spent on a nomination form every couple of years can spare the people left behind months — sometimes years — of administrative, regulatory and emotional burden.
About the AuthorChristopher Hall, AdvDipFP, is the principal financial adviser at Arrow Equities and an Authorised Representative under AFSL 526688. He has completed more than 500 life insurance policy reviews for Australian families, with a specialisation in life risk insurance.
More on Life Insurance and Superannuation from Arrow Equities
Own Occupation vs Any Occupation TPD: Which Definition Actually Protects You? — the TPD definition type determines whether a claim succeeds. Christopher Hall explains which definition matters and when.
TPD Insurance Payout in Australia: How Much Is Received and What Tax Applies? — how much a TPD payout is, and whether ATO tax applies, depends on where the policy is held and who receives it.
Life Insurance Inside Super: Is Your Default Cover Actually Enough? — default super cover can fall well short of what a family needs, and beneficiary nominations are often overlooked at the same time.
Bibliography
# | Source | Type | Date |
1 | ASIC — Report 806 'Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve' (REP 806), asic.gov.au | Tier 1 — regulatory | 31 March 2025 |
2 | ASIC MoneySmart — 'Who gets your super if you die', moneysmart.gov.au | Tier 1 — institutional | 2025 |
3 | Pigott Stinson — 'Superannuation death benefit payments', pigott.com.au | Tier 2 — editorial | Accessed June 2026 |
4 | ATO — SMSF Determination 2008/3 (SMSFD 2008/3), ato.gov.au | Tier 1 — regulatory | 17 December 2008 |
5 | High Court of Australia — Hill v Zuda Pty Ltd as Trustee for the Holly Superannuation Fund [2022] HCA 21 | Tier 1 — regulatory | 15 June 2022 |
6 | ATO — 'Death of an SMSF member', ato.gov.au | Tier 1 — regulatory | Accessed June 2026 |
7 | SMSF Association — 'Super death benefits guide', smsfassociation.com | Tier 2 — independent research | October 2019 |
8 | NSW Law Society — 'Superannuation Death Benefit FAQs', lawsociety.com.au | Tier 2 — editorial | August 2020 |
9 | Paul Ellis and Julian Smith, Maddocks — 'SMSF Beneficiary Nominations — keep them current', Cleardocs ClearLaw, cleardocs.com | Tier 2 — editorial | Accessed June 2026 |
10 | Christopher Hall, Arrow Equities — proprietary findings from 500+ Australian life insurance policy reviews | CH practitioner | 2026 |
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