Binding Death Benefit Nomination

What’s in our package:

• letter
• checklist
• binding nomination
• trustee minutes
• notifications to dependants and
• detailed explanatory memo.

Why should I have a Binding Death Benefit Nomination?

These days, a person’s superannuation benefit can be one of their highest valued assets. A superannuation benefit is also not covered by a person’s Will. Accordingly, members of a SMSF invariably wish to gain the added certainty and comfort of documenting their directions regarding their superannuation entitlement and benefit upon their death. DBA firmly believes that Binding Death Benefit Nominations (‘BDBNs’) can play a crucial role in estate planning where the superannuation moneys are significant (whether by way of fund balance and/or insurance proceeds). For example, in the case of a couple with children, a BDBN can be used distribute super to the children equally should both spouses not survive. However, if a child predeceases leaving children of their own, then these grandchildren are generally not ‘dependants’ for superannuation purposes. Thus, the benefit that is directed to the grandchildren must be paid to the estate and dealt with in accordance with the person’s Will. Where there is no surviving spouse or children, the super can be distributed to the person’s estate and be dealt with under their Will. The above highlights the vital link between a person’s BDBN and their Will. To do a BDBN without consideration of a person’s Will could be dangerous! There are many BDBNs prepared that merely nominate one person in a form, eg, the person’s spouse or children, without any further direction. These standard forms are often incapable of addressing more complex issues. Further, there are many BDBNs that expire at the end of three years. The SMSF trust deed can, however, incorporate a BDBN clause which allows an indefinite nomination to be made. DBA generally finds that a three year period is too short for its clients. However, DBA does recommend that a person’s estate plans be reviewed at least every three years and revised if necessary. DBA BDBNs are often drafted like a Will to address the above issues. Note that DBA’s SMSF package (both new and upgrades) includes a BDBN form. This BDBN service is for those wanting a tailored BDBN prepared by a lawyer having regard to your particular background and needs. This package documents a SMSF member’s binding direction in respect of their superannuation balance upon death. The SMSF’s deed needs to have the power to complete a BDBN. We can provide an estimate in respect of completing your BDBN once we have your instructions and background details, including a copy of your current SMSF deed and Will.