Is the Binding Death Nomination form you have completed really binding on your Superannuation Trustee?
Not many Australians give thought to who will receive the balance of their superannuation when they pass. Many incorrectly believe it automatically passes to their estate while others believe it will go to whoever they nominate.
Under the superannuation legislation, there are limited parties to whom your superannuation monies can be received by and unless you have a valid Binding Death Nomination in force when you pass, the Trustees of your superfund will have discretion as to who the monies will be paid to and in what proportions.
In order to ensure that the monies are paid to the parties that you want and to remove the discretion of the Trustees of the superfund, you must complete a Binding Death Nomination. The wording of the Binding Death Nomination is crucial to once again ensure that it is binding upon your Trustees.
A recent decision of the Queensland Supreme Court has addressed the issue of whether a Binding Death Nomination form which directed that the deceased’s death benefits from his superannuation fund be paid to the “Trustee of Deceased Estate” upon his passing was valid and binding on the Trustees of the super fund. The Trustees argued that it was not and elected to pay the monies directly to the surviving beneficiaries of the deceased.
The Court looked at the wording of the Trust Deed which governed the super fund (which in this case was a Self Managed Super Fund) which stated that death benefit payments could be made in favour of a member’s ‘dependant’s or the members ‘legal personal representative’. The Court then reviewed the definition of ‘legal personal representative’ under the superannuation legislation and determined that the Binding Death Nomination form was not valid and therefore not binding on the Trustees of the super fund.
This resulted in the Trustees being able to make payment of the death benefits in contrast to what was obviously the deceased’s intention that they form part of his estate and be distributed in accordance with the terms of his Will.
The ruling of the court shows how important it is to obtain advice before you complete a Binding Death Nomination to ensure that it will be valid and enforceable upon your passing.
If you have any queries about the payment of death benefits under your superannuation, please contact our Wills and Estates team at McLaughlins Lawyers, your Gold Coast lawyers.