Superannuation and binding death benefit nominations

Posted on May 22nd, 2015

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By Robert Lindsay

Robert Lindsay is a Director at Mullane & Lindsay in Newcastle and leads our Commercial & Property Law team.

Many individuals or families have their own self managed superannuation funds (SMSF). Superannuation is paid after a member’s death at the discretion of the Trustee of the fund. However, if the Trust Deed creating the superannuation fund provides for a Binding Death Benefit Nomination then a member of a fund can direct the Trustee of the superannuation fund how the superannuation should be paid in the event of the member’s death. The member can remove the discretion of the Trustee. However, it is very important to ensure that the Binding Death Benefit Nomination form is valid. The recent decision of Munro v Munro in the Supreme Court of Queensland is a reminder of the care that is required. In that case Mr Munro, a retired solicitor established a self managed superannuation fund in 2004 with his wife and himself as Trustees. In 2009 he signed what purported to be a Binding Death Benefit Nomination in favour of “the Trustee of Deceased Estate”. Unfortunately, however the Nomination failed. Clause 31.2 (b) of the Trust Deed creating the superannuation fund provided that the Nomination in a Binding Death Benefit Nomination form must be in favour of one or more nominated dependents or the legal personal representative of the member.

Section 10 of the Superannuation Industry (Supervision) Act 1993 defines the term legal personal representative to mean:-

“The executor of the Will or administrator of the Estate of a deceased person, the Trustee of the Estate of a deceased person under a legal disability or a person who holds an Enduring Power of Attorney granted by person.”

The Judge held that the purported Binding Death Benefit Nomination in favour of “Trustee of deceased Estate” was not in favour of Mr Munro’s legal personal representative (being the executor of his Will). Therefore the Nomination failed.

It is very important to ensure that the Binding Death Benefit Nomination form accurately reflects the wishes of the member and also is completed correctly.

Robert Lindsay is a Director at Mullane & Lindsay, and practises extensively in Commercial Law, Property Law and Wills & Estate Planning. If you require any assistance in this area please contact Robert Lindsay to arrange a consultation or contact our Newcastle office. 

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