Superannuation - Binding Death Nomination
You can provide for your superannuation benefits on your death by making a Binding Death Nomination. A Binding Death Nomination provides greater certainty about who will receive your superannuation benefits in the event of death. A Binding Death Nomination is a legal document that obliges (or “binds”) the Trustee of your Superannuation fund to pay the death benefit to the person or persons that you have nominated. If the death benefit is to be paid to more than one beneficiary, it must also be paid in the proportions nominated in the form.
An important restriction is that a Binding Death Nomination is only valid for three years from the date it is signed.
What happens without a Death Nomination?
In the absence of a Binding Death Nomination the trustee is bound to deal with the benefit in the best interests of the member. When deciding on payment, in the event of death, the trustee will typically enquire about the deceased’s family situation, dependants, provisions in the will, etc before making a decision. The benefit must be paid to the deceased’s dependents or their legal representative (defined below).
Who can be nominated in a Binding Death Nomination?
You can only nominate a dependant or your legal personal representative.
Legal personal representative is defined as the executor or administrator of the estate of the deceased, the trustee of the estate of a person under a legal disability or a person who holds an enduring power of attorney granted by a person.
Dependent (Section 10): At 30 June 2004, the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act repealed the old definition of dependant in both superannuation and taxation law and instead introduced a definition of ‘interdependency’.
Individuals previously defined as a dependant (a spouse, former spouse under tax legislation, and a child under 18) continue to be included under the new definition of persons in an interdependency relationship.
An interdependency relationship between two people exists if (Section 10A):
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they have a close relationship;
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they live together;
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one or each of them provides the other with financial support; and
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one or each of them provides the other with domestic support and personal care.
Therefore, interdependency now also includes:
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same sex partners; or
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two elderly siblings that reside together; or
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an adult child who resides with and cares for an elderly parent.
In some circumstances, where due to a physical, intellectual or psychiatric disability, all of the above conditions cannot be met, an interdependent relationship may still exist.
If someone is nominated who is not covered under the definition of interdependency relationship or your legal personal representative, the trustee cannot pay the benefit to that person. The trustee can only pay death benefits to your beneficiaries as defined under the law or to personal legal representative of your estate.
You may nominate as many beneficiaries as you wish (or the individual funds rules allow).
An important restriction is that a Binding Death Nomination is only valid for three years from the date it is signed.
Summary of the Requirements for a Binding Nomination
The legislation is quite specific on the requirements for a binding nomination to be legally effective.
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The beneficiaries must be a dependent, in an interdependent relationship or legal personal representative.
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The proportions for payment must be certain. All details are provided and allocations clear.
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Nominations must be in writing, signed and dated by you in the presence of two witnesses who are at least 18 and are not beneficiaries. The declaration must contain a declaration signed and dated by the witnesses stating that you signed the notice in their presence.
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Nominations must be renewed at least every three years.
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The fund has a duty to seek clarification if the nomination is not clear.
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If a binding death benefit nomination is made, the annual member report should include information about the nomination and its effect.
