If you have a superannuation interest, it is important that you consider who will receive the benefit of the fund and any associated insurance benefit when you pass away.
A binding death benefit nomination (BDBN) allows you to nominate the person or persons who you wish to receive your benefits after your death (provided they meet the requirements of a dependant as defined by superannuation law), removing the discretionary power from the trustee. This enables you to make your intention clear, and to direct the trustee to provide the benefits to the named person or persons.
This distribution is conducted separately from any distribution under the will and does not form part of your estate under your will.
If you do not have a binding death benefit nomination in place with your superannuation fund at the time of your death, then you risk your superannuation benefit being placed into and forming part of your estate to be divided amongst your beneficiaries.
The 2014 Supreme Court of Queensland case of McIntosh v McIntosh has highlighted the importance of considering your superannuation funds when carrying out your estate planning and what can happen if you don’t.
In this case, a gentleman died without a will, spouse or children and as a result his mother and father were both entitled to share in his estate equally. His mother subsequently applied to be the sole administrator of his estate and unbeknownst to his father (with whom his mother did not get along), she directed the super fund to pay the entirety of the superannuation death benefits (totalling some $450,000.00) directly to her personal account.
This meant that the asset pool to be divided between the gentleman’s parents was a meagre $80,000 as the super funds did not form part of the estate.
The Court found that in the absence of a will and a BDBN, then an administrator of an estate has an obligation to request that the trustee of the super fund pay the benefits to the estate rather than the administrator personally, and thus the mother was ordered to pay the super funds into the estate to share equally with the father.
While the trustee does not have to exercise its discretion as directed by the administrator in the event that there is no valid BDBN, it should be clear that the administrator has taken steps to have the benefits paid to the estate.
The above is just one example of a situation where a will and binding death benefit nomination could have removed any ambiguity about who was to receive the assets after someone’s passing.
To arrange to have a will drafted, assistance with completing a binding death benefit nomination or a comprehensive estate planning consultation, please contact our friendly and experienced Gold Coast Wills & Estate team on 07 5563 8970.
