A recent Supreme Court of Queensland decision serves as another reminder that strict adherence to the requirements in the trust deed is paramount for BDBNs.
Superannuation fund deeds are trust deeds that are governed by trust law principles. In this article, we will
examine how trust law principles and a superannuation fund trust deed interact with binding death benefit nominations (BDBNs).
Death and superannuation
Regulation 6.21 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SISR) requires death benefits to be paid “as soon as practicable” after the member dies. Superannuation death benefits are not considered to be testamentary in nature, meaning they do not automatically form part of the estate of the deceased.
The payment of a death benefit is generally a matter of trustee discretion, subject to an exception in the case of BDBNs. A superannuation fund trust deed may allow members of the fund to give the superannuation fund trustee a direction, setting out how they wish their superannuation death benefits to be distributed on their death, and such nominations may bind the trustees. Notwithstanding that the interaction of laws governing superannuation, trusts and tax contain pitfalls for the unwary, properly drawn BDBNs provide great certainty, especially where blended families are involved.
This paper provides the technical background to the practical aspects discussed in the session.
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