Tuesday, February 8, 2022

Sometimes** the law matters: Binding nominations and wills

Today’s post looks at whether the superannuation death benefits can be regulated via a will.

This issue was considered by the Superannuation Complaints Tribunal (SCT) in D11-12/066 where the deceased failed to execute a binding death benefit notice (BDBN) or a non-binding nomination.

Instead, she executed a will which appointed her spouse, son and daughter as legal personal representatives (LPR) and left a specific bequest to her spouse.

The trustee of the fund was of the opinion that in the absence of a BDBN, the entire superannuation benefit had to be paid to the LPR of the deceased, to be distributed in accordance with the terms of the will.

The deceased’s spouse challenged this decision arguing that it was unfair and unreasonable given the deceased had left a specific bequest in her will to her. The spouse argued that this bequest constituted a death benefit direction.

The SCT found that the decision of the trustee to distribute the superannuation benefit to the deceased’s LPR was not unfair, unreasonable or contrary to law. The trustee’s decision was in accordance with the terms of the deed and the superannuation law and this, according to the SCT, was the correct decision.

The decision highlights the importance of standalone nominations and that it is unlikely a provision in a will can ever constitute a valid nomination.

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** for the trainspotters, ‘Sometimes’ is a song by U2.