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A recent court case highlights the care required when putting in place a Binding Death Benefit Nomination (BDBN) in a Self Managed Super Fund.

valid death benefit nominationThe Queensland Supreme Court Case of Munro v Munro [2015] saw the trustees of a SMSF refuse to give effect to a BDBN in the belief it was not binding on them. The deceased, Mr Munro, had signed a BDBN which left 100% of his  SMSF assets to “Trustee of Deceased Estate”.

The SMSFs Trust Deed required that benefits paid via a BDBN can only be paid to:

  • One or more of the members’ dependants; or
  • The member’s legal personal representative.

While Mr Munro’s intentions are clear, unfortunately “Trustee of Deceased Estate” was not recognised as a specified recipient in the Trust Deed and therefore did not comply with superannuation law and the trust deed and it was therefore held by the court that the death benefit nomination was not binding.

In this case, if Mr Munro had have nominated his legal personal representative (rather than the trustee of deceased estate) his benefits would have gone to his estate to be distributed via the provisions in his Will.
A simple, yet very costly mistake. 

It is therefore essential that SMSF members check any BDBNs they have entered into to ensure they are in fact binding on the trustee.

The full decision of Munro v Munro can be found at Munro v Munro www.sclqld.org.au/caselaw/QSC/2015/061

Talk to Segue Financial Services about putting a Binding Death Benefit Nomination in place. Call us on 9509 1599.

Segue Financial Services

Ground Floor, Suite 2

307-313 Wattletree Road

Malvern East VIC 3145

Phone: 9509 1599

Fax:+61 (03) 9509 1577

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