Tuesday, October 6, 2015

Can an attorney sign a binding nomination?

A recent post looked at the issues surrounding SMSF control on trustee incapacity (see - http://blog.viewlegal.com.au/2015/07/incapacity-and-smsf-control.html)

Adviser feedback raised the adjacent issue of whether an attorney can sign a binding death benefit nomination (BDBN) on behalf of an incapacitated member.

While there are differing views, there has been at least one decision by the Superannuation Complaints Tribunal confirming that an attorney can make a BDBN, namely Superannuation Complaints Tribunal, Decision D07-08\030. As usual, a link to a full copy of the decision is as follows - http://www.sct.gov.au/dreamcms/app/webroot/uploads/determinations/D07-08-030.pdf

The decision of the Tribunal ultimately held the relevant BDBN was invalid for other reasons, it provides at least some authority for the argument that a BDBN need not be made personally by a member.

In this context however it is important to note that the Law Council of Australia, in their submissions to the Australian Law Reform Commission’s Report number 124, confirmed its view that some industry funds will not in fact accept nominations made by an attorney.

Generally, at least for self managed funds, it seems to be accepted that an attorney can at a minimum ‘affirm’ an existing BDBN, if it has lapsed for any reason. This conclusion however is always subject to the terms of the fund’s trust deed and a future post will likely consider this aspect in more detail.

Ideally an express power should be included in a member’s enduring power of attorney to put the attorney (again subject to the trust deed) in the best position to be able to validly make nominations as they determine appropriate, for example using wording as follows –

(a) Any attorney can enter into transactions where their interests and duty could conflict with my interests in relation to the transaction.

(b) Any attorney may sign any form of superannuation nomination (whether binding or non-binding, lapsing or non-lapsing) regardless of whether they may be married to or related to or themselves be a nominee.

Image credit: Sebastien Wiertz cc