A binding death benefit nomination is a legally binding nomination that grants a person the chance to advise the trustee who is to receive his superannuation benefit in the event of death. For a nomination to be binding, it should be valid. One sign of validity is only ‘dependants’ can be nominated.
To further understand the concept of BDBN, take a look at the ruling made by the Supreme Court of Queensland on the case of an adult child with disability. The decision of the Court allows the child’s mother to make a BDBN following on the authority it granted her to make a will for the child.
The child is 30 years old and had severe brain injuries due to medical negligence during birth.
As compensation for the medical negligence, the child received a significant amount of money. A large portion of the money was contributed to the superannuation fund of the child.
The super contribution was deemed to have been made from a structured settlement. This means it was not limited in its dollar amount, and was not classified as concessional or non-concessional. Thus, it was not subject to any applicable caps.
Based on the size of the contribution, the child’s superannuation benefit was substantial. In turn, it prompted the potential need for the child to have a BDBN. The compensation also led to the child having considerable wealth outside the super system, causing the need for a will to be made for him.
The court ruled the proposed will for the child and decided that it is necessary to also have a BDBN based on the amount in the child’s superannuation fund. The court relied on its ‘related orders’ jurisdiction in making its order, conferring power on the child’s mother to implement a BDBN.
Learn more about death benefits nominations from Effective PD’s webinar. This webinar also covers other topics like online TBAR lodgement and disqualified trustees register. To subscribe, visit www.effectivepd.com.au. Effective PD offers an innovative way for busy accountants to be on top of their game with continuing professional development in a brief, flexible and easy way.
