SMSFs and Binding Death Benefit Nominations
Most of us have some form of superannuation, either in an industry fund or a Self Managed Super Fund (SMSF) in Australia. Here at McNab McNab & Starke, we know just how crucial it is that you understand the way your super works, particularly in relation to SMSFs. You want full control over what happens to your assets when you die, and one way to ensure your superannuation goes to the right place is through a death benefit nomination.
Types of Binding Death Benefit Nominations
There are a few different types of death benefit nominations, including the following:
- Non-Binding Death Benefit Nomination
A non-binding death benefit nomination is a recommendation rather than a mandate. It advises the trustee of your super fund to whom you would like to receive your super. Ultimately, however, the trustee decides. While non-binding, it can still serve as valuable guidance for the trustee and your loved ones.
- Binding Death Benefit Nomination (BDBN)
A binding death benefit nomination is a legally enforceable directive that stipulates who will receive your super when you die. As long as certain parameters are met, the trustee of your super fund must follow your instructions as outlined in the BDBN regardless of the stipulations of your Will. This provides certainty and ensures your wishes are carried out without the trustee’s discretion. Binding death benefit nominations tend to lapse after three years unless renewed.
- Non-Lapsing Binding Death Benefit Nomination
Similar to a standard binding death benefit nomination, a non-lapsing BDBN remains in effect indefinitely unless you revoke or update it. This means it doesn’t expire after a certain period, which provides ongoing assurance that your super will be distributed according to your wishes, even if your circumstances change over time.
- Reversionary Pension
For those receiving a pension from their super fund, a reversionary pension nomination allows you to nominate a beneficiary to continue receiving the pension upon your death. This nomination ensures a seamless transition of pension payments to your chosen beneficiary, typically a spouse or dependent.
Contact the Professionals to Get Your Affairs in Order
When it comes to your superannuation, understanding the different types of death benefit nominations is very important, but it’s only one part of a much bigger overall process. SMSFs require particular care when drafting the appropriate death benefit nomination to ensure they are valid and meet legislative requirements. You should regularly review your super trust deeds, including any variations and death benefit nominations, together with your Wills and Powers of Attorney. The professionals at McNab McNab & Starke are here to assist you with that process.
If you would like to come and see us, we can help to ensure that your succession planning is properly in place, providing security and peace of mind for you and your loved ones. Just contact us online or give us a call and make an appointment at one of our convenient locations in Victoria.
Caution: This document is intended solely as a source of information to provide a general overview of SMSFs and Binding Death Benefit Nominations, and you must not solely rely on this blog to form a view.