The case of Re Rentis Pty Ltd  QSC 252 (Re Rentis) provides a helpful interpretation of an attorney’s powers to make a binding death benefit nomination (BDBN). This case examines the meaning of a term often found in enduring powers of attorney (EPA) and provides an expansive view of an attorney’s powers to make a fresh BDBN that differs from a principal’s prior BDBNs.
- Robert was a member of the Robert Stannett Superannuation Fund (Fund).
- Robert had appointed his wife and brother Peter as attorneys under an EPA.
- The EPA gave an express power to ‘renew’ a BDBN.
- In October 2020, prior to losing capacity, Robert made a BDBN directing the trustee to pay his death benefits as follows:
- 50% to his wife; and
- 25% to each of his children.
- Robert lost capacity in December 2020.
- Robert’s wife died in February 2021, leaving Peter as the sole attorney under the EPA.
- Peter, in his capacity as attorney for Robert, made two new BDBNs regarding Robert’s death benefits on 9 May 2022 and 17 May 2022 (17 May BDBN). This case considered the validity of the 17 May BDBN as this was the last made. The 17 May BDBN directed the trustee to pay Robert’s death benefits as follows:
- 25% to each of his children; and
- 50% to Robert’s estate.
Power in EPA
The EPA contained the following express term:
I authorise my attorney/s to renew any binding death benefit nomination made by me for any superannuation benefits or entitlement.
Accordingly, the court considered the meaning of the term ‘renew’ and whether it should be construed narrowly or given a purposive interpretation.
On a narrow interpretation, it was argued that the term ‘renew’ would only allow an attorney to make another BDBN that repeats the terms of the previous BDBN made by the principal.
The court did not favour this narrow interpretation. It said that:
A narrow construction would produce capricious, unreasonable and certainly inconvenient results for a principal who became incapacitated and whose circumstances had changed or where other circumstances had changed. One would think that it is precisely the existence of changed circumstances that gave rise to the authority given to the attorney to renew any binding death benefit in the sense of making a fresh BDBN, that is, to make a new BDBN to address those circumstances or to renew the BDBN.
It was held that the term ‘renew’ did allow the attorney to make a BDBN that differed from the earlier BDBN made by the member.
Importantly, the court did make a distinction here between the issue of whether an attorney has the power to make such a BDBN, being the issue in this case, as compared to a contention that the power should have been exercised in a different way, which was not considered here.
Re Rentis provides helpful guidance on how courts may determine the meaning of the power to ‘renew a BDBN’ when this appears in an EPA.
When members are considering their succession and death benefits plans, they should ensure that all relevant documents, including the SMSF deed/rules, EPA and Will are harmonised and take the other documents into account. As Re Rentis shows, without clear directions and wording in a document, parties may be required to seek court orders where there is doubt.
While not an issue in Re Rentis, where a member would like their attorney to have the power to make a new BDBN under which they themselves benefit, an EPA should contain express conflict authorisation provisions.
Also, other factors could be relevant, for example, the provisions of the EPA legislation in the relevant state or territory.
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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice can only be obtained from a licenced financial adviser under the Corporations Act 2001 (Cth).
For more information regarding how DBA Lawyers can assist in your SMSF practice, visit www.dbalawyers.com.au.
15 November 2023