A binding death benefit nomination is a written direction to your superannuation fund setting out how you wish your superannuation death benefits to be distributed. Binding death nominations are a legally binding document, and, if it is valid at the time of the member’s death, a trustee will be bound by law to follow it. Usually, various superannuation funds have their own binding death nominations forms which can be accessed online, printed, and completed.
Importantly, to be considered binding, a death nomination needs to adhere to certain rules as outlined in the Superannuation Industry (Supervision) Act 1993 (‘the Act’). These rules include who can be nominated under a binding death nomination, and how the nomination needs to be witnessed.
Frequently Asked Questions
Why make a binding death benefit nomination?
Binding death benefit nominations help ensure you can feel certain about where your super will go after you die. This may be particularly relevant if you have multiple people who may be eligible to claim on your death benefit (e.g., children from previous marriages), but want to specify exactly who you would like to receive the benefit. Likewise, if there is a need to protect a particularly vulnerable beneficiary (for example, a child with a disability) then having a binding death nomination can ensure that any benefit is distributed according to your wishes.
Further, binding death nominations can help to ensure that the benefit is distributed easily and quickly. Your beneficiary will not have to wait for the trustee or the deceased estate to determine distribution, rather, they will be able to quickly access your assets. This may be extremely important if your beneficiary may need quick access to your benefit.
If certainty already exists, and it is clear where any benefit will go to (for example, in the case of a single dependant), then a binding death nomination may not be necessary.
But isn’t Superannuation covered in a will?
Often people assume that the only document relevant when considering the distribution of their assets when they die is their will. However, superannuation is not automatically included as an asset in a deceased’s estate. Therefore, unless it is expressly accounted for, a will won’t assist in the distribution of an individual’s super after they die. This is where a binding death benefit nomination will prove extremely useful.
Nominations can only be made to a deceased’s legal representative or dependant. A legal representative is defined in the Act as ‘the executor of the will or administrator of the estate of a deceased person, the trustee of the estate of a person under a legal disability or a person who hold an enduring power of attorney granted by a person’.
A dependant is defined in the Act as ‘the spouse of the person, any child of the person and any person with whom the person has an interdependency relationship’.
Does a binding death benefit nomination need to be witnessed?
Currently, the Act stipulates that two witnesses must sign the form. Failing to correctly complete and witness the form will invalidate the nomination.
How long is the nomination valid for?
The binding death benefit nomination is generally valid for a maximum of three years. After this time, the nomination will lapse if not renewed.
What happens if you don’t make a binding death nomination?
If you die without making a nomination, the trustee of the superannuation fund will follow relevant laws and distribute your super at their discretion. This leaves the status of your assets in a state of uncertainty.
How Burgess Thomson Lawyers can help
The team at Burgess Thomson Lawyers is highly experienced in the area of estate planning and can assist you in the preparation of various estate documents including wills and binding death nominations. With a wealth of knowledge equipping the team, they will be able to ensure any binding death nominations are correctly made and adhere to all relevant rules to ensure peace of mind.
We want you to feel comfortable knowing your assets are going to be distributed according to your wishes and can help ensure the best chance of this through creating accurate and robust legal documents. Get in contact with the team at Burgess Thomson today to discuss how we can assist.