The Queensland Supreme Court decision of Munro v Munro has found that a binding nomination signed by a member of an SMSF was invalid because it did not strictly comply with all of the provisions of the fund deed and that near enough is not good enough.
In this case, Mr Munro made a binding nomination in favour of the "Trustee of Deceased Estate". The trust deed provided that a binding nomination could only be made in favour of the member's dependants or legal personal representative. After Mr Munro's death, Mrs Munro as trustee of the fund determined that the binding nomination was defective and that therefore she was not bound to follow it. Consequently, she decided to pay the death benefits to herself to the exclusion of Mr Munro's daughters from a previous marriage. The Court found in Mrs Munro's favour on the basis that the nomination of the "Trustee of the Deceased Estate" was not to a dependant or the legal personal representative. In coming to this conclusion the Court distinguished the role of a legal personal representative (which under the Superannuation Industry (Supervision) Act 1993 is defined as the executor of the will of the deceased person) and the nomination of the trustee of the deceased estate.
This decision serves as a timely reminder to read the fund deed and ensure that a binding nomination strictly complies with all requirements of such deed, including using the correct terminology.
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