SMSF & Binding Death Benefit Nominations

What Is A Death Benefit Nomination?

A superannuation fund may permit a member to give a notice to the trustee of the superannuation fund requesting that the member’s benefit be paid at their death to either the member’s estate or to their dependants as specified in the notice.

The notice may be either a binding nomination or a non-binding nomination. A binding nomination is an instruction to the trustee by the member and the trustee must comply with it. A non-binding nomination, on the other hand, is merely an expression of the member’s wishes, and the trustee can exercise its discretion not to follow the nomination.

Only by making a binding nomination can you ensure that your intentions regarding your superannuation will be carried out. In the absence of a binding nomination, it is the trustee of a superannuation fund who decides how and to whom superannuation benefits are paid following a member’s death.

Plan Now For Peace of Mind.
A binding nomination gives you certainty that your superannuation death benefit will be dealt with in accordance with your wishes. If you have put in place an estate planning strategy to achieve particular outcomes, a binding nomination can ensure your superannuation death benefits are paid in accordance with that strategy.

What Is Required To Make The Nomination ‘Binding’?

In a public offer superannuation fund, a member’s death benefit nomination is binding if each of the following conditions is met:

• The governing rules of the superannuation fund permit binding death benefit nominations;
• Each death benefit nominee is a legal personal representative of the member’s estate or a dependant of the member;
• The allocation of the death benefit between the nominees is clear;
• The notice is in writing, and is signed and dated by the member in the presence of two witnesses aged over 18, neither of whom is a nominee;
• The notice contains a declaration, signed and dated by the witnesses, stating that it was signed by the member in their presence;
• No more than three years have passed since the notice was first signed, last confirmed or amended by the member.

A nomination made in this manner will also usually bind a trustee of a self-managed superannuation fund or a Small APRA Fund. However, these funds usually have the advantage that the governing rules of the fund may allow a member to bind the trustee to pay a death benefit in accordance with the fund’s rules without the requirement to renew the nomination every three years and have the nomination witnessed.

Keep It Current.
A binding nomination provided to the trustee of a public offer superannuation fund will generally lapse if it is not confirmed or renewed within three years of it being made, leaving the distribution of your superannuation benefits to the discretion of the trustee of your superannuation fund. So make sure you stay up to date and keep it current. We can help.

If you are concerned about how your superannuation benefits will be distributed, a properly made and executed binding death benefit nomination can give you peace of mind. Brien Leibinger Lawyers can help. Contact us today on (07) 4225 5420 or info@leibingerlawyers.com.au