Take care with Binding Death Benefit Nominations

A recent Queensland Supreme Court case highlights the importance of ensuring that your binding death benefit nomination (BDBN) complies with the requirements of the trust deed for your self managed superannuation fund (SMSF).

In Munro v Munro the Court held that Mr Munro’s BDBN was invalid (and therefore not binding on the trustees) because it nominated the “Trustee of Deceased Estate”.  The SMSF trust deed only allowed a binding nomination in respect of a dependant or legal personal representative.  The technical view taken by the Court was that the required terminology in the nomination was “legal personal representative”.  The result meant that Mr Munro’s second wife, (Patricia) was able to pay the entire death benefit to herself.  Had the death benefit being paid to Mr Munro’s estate, Patricia would have received a bequest of $350,000 with the rest being paid to Mr Munro’s daughters from his previous marriage.
With superannuation forming a large portion of many clients’ wealth, the validity of BDBNs are increasingly likely to be tested.  In the context of your estate planning, it would be wise to consider:

  • who will control your SMSF on your death?
  • who has drafted your BDBN and have they read the trust deed for your SMSF?

Recent Articles

Update on Drought Assistance

16th August 2019

RAA – Rural Assistance Authority https://raa.nsw.gov.au Farm Innovation Fund The Farm Innovation Fund is part of the NSW Government’s Drought Strategy and... Read More

Planning Opportunity - Carry forward (Catch-up) Concessional Contributions

08th July 2019

From 1 July 2018, individuals with total superannuation balances below $500,000 have been allowed to carry forward the unused... Read More

1 July 2019 Retail and Industry Fund Insurance Changes

25th June 2019

From 1 July 2019, the Protecting Your Super reforms will commence. It’s important to understand how these changes will... Read More

Important ATO changes to payroll procedures

25th June 2019

Single Touch Payroll (STP) is an ATO reporting obligation which requires employers to report employee payroll information, including superannuation,... Read More