Estate Law and Family Law

It is an often misconceived notion that upon your death your superannuation and any insurance entitlements which form part of your superannuation will form an asset of your estate. In the case of Death Benefit Insurances this may not be the case. Depending upon the terms of the superannuation deed, any benefits accumulated under your superannuation must be paid out upon the death of the member (you), however to whom it is paid to will vary.

When you selected your superannuation provider you would have completed a form nominating who you would like to receive the benefits of the insurance.

However unless you have executed a binding death benefit nomination then this will not be binding on the trustee of your superfund. In most circumstances, the trustee of the super fund, will be entitled to exercise their discretion in paying the money to whom they deem a dependant of your entitlements. This may include your spouse, (including same sex or de-facto), a child whether natural or by adoption, or any person whom had an interdependency relationship with the member at the date of death.

So what is a Binding Death Benefit nomination ( BDBN) and when would you need to make one? A BDBN is a nomination directing the Trustee of the fund to pay the benefits to the person or persons that you nominate. In order to make a BDBN you can contact your fund administrator and they will be able to direct it, however in the case of a self managed super fund, it will first be necessary to ensure that the fund has the powers to allow you to make the nomination. Where the power does not exist it is possible to introduce additional powers to allow you to.

A BDBN will generally be effective for 3 years and must be regularly renewed. This is to ensure that your nomination remains current and does not exclude changes to your life circumstances. Where your BDBN lapses, the Trustee will have regard to, but will not be compelled to follow your direction. A BDBN is particularly useful in situations where you wish to nominate that a particular person should receive the benefits, or to particularly exclude a person from receiving a benefit. While there are advantages and disadvantages in these scenarios, it is important to consider your personal circumstances. Just as you would obtain advices when preparing your will we recommend that you obtain advices when preparing you BDBN to be sure that you have considered all of the appropriate circumstances including taxation.