Is Your Binding Death Benefit Nomination Precise Enough?
A recent decision of the Supreme Court in Queensland (the appeal period has now expired) has held that a binding nomination given by a super fund member to the trustee in favour of “the trustee of a deceased estate” was not valid for the purposes of the trust deed or the superannuation legislation.
The Court decided that a nomination had to be worded to meet the precise definitions in the Superannuation Industry (Supervision) Regulations, which refer to nominations in favour of the member’s “legal personal representative“, which is either “the executor of the will” or “the administrator of the estate“.
The result was that instead of children from the first marriage taking the benefits (via the estate), the fund trustee (controlled by the second wife) exercised its discretion. It decided to pay 100% of the benefits to her.
Notwithstanding it is a Queensland decision, and is arguably splitting hairs, it is likely to be followed in a Western Australian dispute.
Accordingly, binding death benefit nominations should be checked to ensure that the wording is clear and, if there is any doubt, redone.
Many nominations may be less certain than anticipated.
Obviously, the higher risk situations are second marriages and split families, but anyone undertaking estate planning and doing Wills (and dealing with their super) wants certainty, and the comfort that the documents will stand up.
As wealth in super funds (often self-managed funds) grows, even greater attention and care is needed to ensure it goes where it is intended.
If you would like your binding death benefit nomination reviewed, or you have any questions, please email Ron Doig or call 08 9426 6222.