Why engage Sheehan & Co. to prepare your Binding Death Benefit Nomination?
We find that many of our clients are not initially aware that their superannuation death benefits do not form part of their estate and thus are not distributed pursuant to the terms of their Wills. Absent a Binding Death Benefit Nomination ("BDBN"), the Trustee of your superannuation death benefits has the discretion to pay your superannuation death benefits to eligible recipients in such shares as the Trustee determines. The exercise of the Trustee's discretion may not in accord with what you would wish.
A Binding Death Benefit Nomination ("BDBN") made by a member of a superannuation fund has the effect of directing the Trustee of the superannuation fund to pay the deceased member's superannuation death benefits to the persons nominated in the BDBN, provided the BDBN is current as at date of death and nominates a dependant ("spouse", "child", "financially dependent", "interdependent") or your executor (also known as your "legal personal representative") as those terms are defined under the Superannuation Industry (Supervision) Act 1993 (Cth).
Sheehan & Co will advise you of the advantages and disadvantages of creating a BDBN, as well as assist you in investigating whether your superannuation funds permits the making of a BDBN by its members. Not all funds do. Some funds only permit the making of a lapsing BDBN which means that you must renew or change the BDBN (as you wish) every 3 years. Failure to renew a lapsing BDBN will result in you not having a current BDBN as at your death with the consequence that the Trustee of the superannuation fund will determine who receives your superannuation death benefits.
We have found that BDBNs are quite often prepared incorrectly which means that they are invalid. There are certain requirements that must be met in order to make a valid BDBN.
The 2015 Supreme Court of Queensland case of Munro v Munro highlights how an apparent simple error can render a BDBN wholly invalid. In that case, the BDBN directed the Trustee of the super fund to pay the superannuation death benefits to the "trustee of the estate" - this was found not to be a direction binding upon the Trustee of the superannuation fund to pay the "legal personal representative of the estate". The Trust Deed establishing the superannuation fund did not recognise the "trustee of the estate" as a valid recipient of the superannuation death benefits. This is because the "trustee of the estate" was held to be not a legally recognisable term under the legislation and under the superannuation Trust Deed.
Irrespective of whether you are member of an industry superannuation fund or you are a member of your own self-managed superannuation fund, we are able to prepare a valid BDBN.
Sheehan & Co will liaise with you and your accountant and/or your financial advisor in relation to your individual requirements. We will review your existing arrangements and provide you with advice as to what changes are required to ensure that appropriate succession arrangements are in place in relation to your superannuation death benefits.
If you are a member of a self-managed superannuation fund and your Trust Deed does not permit the making of a non-lapsing BDBN, we can prepare a suitable Deed of Variation so as to permit a member of your fund making a non-lapsing BDBN. We can then proceed to prepare a valid non-lapsing BDBN on your behalf.