A binding death benefit nomination (BDBN) is a legally binding document which directs your superannuation fund to distribute your superannuation to your nominated beneficiaries in the instance you pass away.
There are limitations on who you can nominate to receive the funds from your superannuation. The nominated beneficiaries can include:
- Your spouse;
- Your child;
- A person who is financially dependent on you; or
- A person who has an interdependency relationship with you at the time of your death.
If you do not have any dependents listed above, you can nominate for your super to be distributed to your estate so that it can be combined with your assets and distributed as part of your Will.
Why do you need a binding death benefit nomination?
A BDBN provides certainty as to where your superannuation funds will go in the event of your death as the trustee of your superannuation fund is bound to distribute your super as the BDBN stipulates.
Additionally, a BDBN may allow for faster distribution of your superannuation than if the funds were to be added to your estate for dispersal and faster than if there is no binding death benefit nomination as in that case the trustees of your superannuation fund have discretion to consider who should be paid your superannuation funds, and there may be competing claims from different family members.
The binding death benefit nomination (BDBN) must be renewed every 3 years, ensuring any relationship changes can be reflected by the new BDBN, for example where a marriage or relationship has ended.
The superannuation trustee cannot use any discretion regarding distributions or distribute funds against the directions of the BDBN, except in the instance where the BDBN is invalid.
How do you make a binding death benefit nomination?
Most superannuation funds will have a binding death nomination form on their website. This form will generally request information regarding the nominated beneficiaries and the percentage of your super balance to be distributed to each beneficiary.
The BDBN must be witnessed by two people aged over 18 who are not listed beneficiaries prior to submission to your super fund. The BDBN will become valid once it has been received by the superannuation trustee.
An important factor to remember is that a BDBN is binding so even if your relationships have changed and your BDBN no longer reflects your wishes at the time of your death, the funds will be paid to the nominated beneficiaries. However, as long as a BDBN is valid and updated to reflect your wishes, it is an important element when made in conjunction with other estate planning documents.
Your super is something you’ve worked hard for and a BDBN is the only binding way to ensure your superannuation funds are distributed where you choose. A binding death benefit nomination (BDBN) is an essential step in estate planning to ensure your money ends up where you want it to.
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Kate Scolyer – Solicitor– Matthies Lawyers
Should you wish to obtain advice regarding your estate planning matters, please contact Matthies Lawyers for an obligation-free consultation or call +61 3 8692 2517 today.
Disclaimer: This article contains general information only and is not intended to be a substitute for obtaining legal advice