Superannuation and skirting the shoals of bankruptcy **

The Federal Court's decision in Cunningham (Trustee) v Gapes (Bankrupt) [2017] FCA 787 (Federal Court, Collier J, 13 July 2017) (Cunningham) is vital guidance for all advisers in relation to the interplay between superannuation death benefits and the Bankruptcy Act 1966.

In particular, the case highlights the fact that a superannuation death benefit paid via a deceased estate to a bankrupt beneficiary is divisible amongst the creditors of the bankrupt.

At a minimum therefore, advisers should consider advising clients who have at risk potential beneficiaries to utilise a binding death benefit nomination (BDBN). The BDBN should mandate that any death benefit is paid directly from the superannuation fund to a beneficiary at risk of bankruptcy, ideally as a lump sum (given that a pension stream will be subject to the threshold income limits).

Testamentary trusts

One additional strategy that should be considered in the context of deceased estates generally, and specifically in relation to superannuation death benefits, is the use of comprehensive testamentary trusts.

As readers will be aware, 1 of the key reasons that testamentary trusts are often recommended is due to the asset protection offered by the structure generally, and in particular where a potential beneficiary is at risk of suffering an event of bankruptcy.

This approach can help protect beneficiaries, regardless of whether a BDBN is in place, or where a BDBN is implemented and mandates payment of the death benefits to the legal personal representative for distribution under the will.

Importantly, testamentary trusts also provide significant flexibility from a tax planning perspective, as compared to the benefits being paid directly to the bankrupt beneficiary. Previous posts have explored a number of the tax planning issues in relation to testamentary trusts (see for example our posts on 13 May 2014 and 27 October 2015).

Unfortunately, we have seen a number of examples recently where no testamentary trust has been incorporated under a will, with superannuation death benefits passing directly to the estate and then in turn to a bankrupt beneficiary. In other words, creating the exact same factual matrix as existed in Cunningham.

Key issues to remember

In summary, the key issues to be aware of in this type of situation are as follows:

1. Where a beneficiary is bankrupt at the time of the death of the willmaker, the bankruptcy legislation mandates that the bankrupt's entitlements are to pass to their trustee in bankruptcy.
2. If there are any assets remaining after the bankruptcy has been discharged, then the beneficiary is entitled to those assets.
3. The right to due and proper administration of the deceased estate is an asset that forms part of the bankrupt's estate, and therefore also vests in the trustee in bankruptcy.
4. If an executor of an estate seeks to avoid assets passing to a trustee in bankruptcy where a beneficiary is entitled personally under the will, the executor will themselves be personally liable.

Importantly, each of the above issues can be legitimately avoided by the appropriate structuring of a testamentary trust into a will, prior to death.

Where testamentary trusts are not included under a will, best practice dictates that the executor should obtain a formal declaration from each beneficiary, before making distributions to them under the will, whereby each beneficiary confirms that they are in fact solvent.

If a beneficiary refuses to provide the declaration, then further searches should be made by the executor to minimise the prospect that the executor might become personally liable to a trustee in bankruptcy.

As usual, if you would like copies of any of the cases mentioned in this post please contact me.

The above post is based on the article we had published originally in the Weekly Tax Bulletin.

** For trainspotters, ‘skirting the shoals of bankruptcy’ is a line from a song named ‘Accountancy Shanty’ by Monty Python from their 1983 movie ‘The Meaning of Life’.

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Here we go again** - invalid BDBNs and failed changes of trusteeship

In holistic estate planning, disputes in relation to SMSFs - and particularly (purported) binding death benefit nominations (BDBN) - are arguably risks of such high probability that there is need for advisers to consider the issues habitually.

The decision in Williams v Williams & Anor [2023] QSC 90 provides a stark example in this regard.

The factual matrix in this case was arguably 'generic' for a material number of SMSFs, that is a blended family with competing interests and (arguably) less than ideal documentation.

In particular:

1. the deceased member of a sole member fund purported to sign a BDBN in favour of a 50% allocation to each of his second wife and his legal personal representative (LPR), for distribution of this portion under his will;
2. the trustees of the fund at the date of the relevant BDBN were the deceased and one of his 2 adult sons;
3. while the deed for the SMSF appeared to require the BDBN to be provided to both trustees in order to be effective, the son (in his role as co-trustee) denied having ever been provided with the document. The son as surviving trustee relied on the fact (that was accepted by the court) that he had not been given the BDBN as supporting a conclusion that the BDBN was void and should be ignored by the trustee, who instead should distribute the death benefit in its discretion.

In relation to the invalidity of the BDBN, the court confirmed:

1. the purpose of communicating a BDBN to the trustees is largely practical - that is, to give effect to a BDBN the trustees must know about it and, in the case of multiple nominations, must know which was current and which had been superseded (these points were confirmed in the decision of Cantor Management Services Pty Ltd v Booth [2017] SASCFC 122, a case featured in other View posts, which in a similar factual matrix confirmed that a BDBN sent to the registered office of the corporate trustee was a valid approach for a member to provide the requisite notice to the trustees);
2. while the trust deed had standard provisions that deemed 'singular wording to include plural' and vice versa (a provision that is included by statute in all deeds and instruments, for example see section 48(1) of the Property Law Act 1974 (Qld)) - these type of provisions were subject to the context of the trust deed;
3. so too the provisions in the trust deed that provided 'the "Trustees or the Trustee for the time being of the Fund" and “Trustee” have the same meaning' were subject to the context of the wider deed and required that where there was more than one trustee the word 'trustees' should be taken to mean all the trustees;
4. thus while the deceased member was aware of the BDBN he had signed, and was also a trustee, the context of the trust deed required both trustees to be notified. This conclusion was further supported by the fact that the deed required that on receiving the written notice, certain further steps be taken, namely, the trustees creating a written resolution accepting the terms of the BDBN;
5. in other words, the knowledge of the deceased member could not automatically affect the co-trustee with knowledge of the transaction (see Cummings v Austin (1902) 28 VLR 347).

The other key aspect of the decision also serves as a blunt reminder of the 'read the deed' mantra so critical for all trust advisers, including in the SMSF space. In particular, a purported change of trusteeship by the surviving son to appoint his brother as a co-trustee was held to be invalid for a range of reasons, including:

1. the relevant documentation purported to have the deceased member as a party - at a minimum the relevant party would have needed to be the deceased member's LPR;
2. while the deed gave a two-thirds majority of members the right to appoint a trustee, the relevant documentation did not rely on these provisions;
3. while the deed also appeared to allow a member's LPR to assume the rights of the member in relation to trustee appointment, the definition of LPR under the deed was limited to a person who had obtained probate of the member's estate; and probate had not in fact been obtained. Therefore, for the purposes of the deed, there was no LPR of the deceased member and the provisions giving rights to the member's LPR were a nullity.

In many respects, a number of the failings in relation to the change of trustee documentation were analogous to the factual matrix in the case of Moss Super Pty Ltd v Hayne [2008] VSC 158, again another case featured in other View posts. In this decision, although not referenced in the Williams case, the trust deed set out the process by which a change of trusteeship could take place and specifically required the 'founder' to appoint any new trustee. While the sole director of the new trustee company was also the founder, she did not in fact sign the change of trustee documentation in her capacity as founder.

In other words, while she signed in her capacity as the sole director of the new trustee, there was no provision where she also signed in her founder role.

Critically, the court found that where structures are created in which individuals have multiple roles to play, the requirements around those roles must be respected and complied with.

Based on the above failings in relation to the purported change of trusteeship - and further concerning conduct and clear conflicts of interest for the son - the court concluded it was appropriate to remove the trustee. The court determined instead to appoint independent trustees, relying on the largely discretionary right for a court to form a judgment on what is in the best interests of the beneficiaries, based upon considerations, possibly large in number and varied in character, which combine to support the conclusion, see Miller v Cameron [1936] HCA 13.

As usual, please make contact if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from a line in the Whitesnake song ‘Here I go again’.

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Hey!** It’s part III of the Ioppolo decision

Las week’s post looked at the original Ioppolo decision.

This post considers the subsequent appeal decision in Ioppolo & Hursford v Conti [2015] WASCA 45.

In broad terms, the appeal decision confirmed the original case, in particular:

1. It was confirmed that section 17A(3)(a) of the Superannuation (Industry) Supervision Act 1993 (SIS Act) does not obligate the trustee of an SMSF to appoint the legal personal representative of a member following that member’s death.
2. In other words, section 17A(3)(a) is a ‘permissive rather than mandatory' provision.
3. This meant that the surviving trustee was within their rights to appoint a corporate trustee (of which he was the sole director) and still comply with the SIS Act.
4. It was further confirmed that as the appointment took place within 6 months of the member’s death, then the fund was still complying for SIS Act purposes.
5. In also confirming that there was no lack of bona fides in the trustee’s decision, the court expressly commented that the subsequent signing by the deceased of a binding nomination (in favour of her husband) meant that it was reasonable to assume that the earlier made comments in her will (requesting that the death benefit pass to her children) had been superseded.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the Pixies song ‘Hey’.

View hear (sic):

(Nothing) challenging** a trustee's decision

Previous posts have considered the key aspects of the Ioppolo decision.

One aspect of the decision, which is potentially very relevant for advisers and clients alike, relates to the plaintiff's argument that the trustee (being effectively the surviving husband) had not exercised his discretion in paying the entirety of his deceased wife's death benefit to himself in a 'bona fide' (or in good faith) manner, and therefore, should have been forced to repay the benefit to the fund.

In addressing this issue, the court specifically commented as follows:

1. The husband had sought specialist advice in relation to his rights and obligations as the trustee;
2. The husband deliberately waived his right to confidentiality (or privilege) in relation to this advice;
3. The court on reviewing the advice agreed with the conclusion given, that being that the husband was able to make the payment to himself;
4. Where a trustee is acting on advice of a specialist, it will be generally very difficult to successfully argue that the trustee lacked good faith in making a decision;
5. Even whereas here, there was a provision of the deceased’s will that contradicted the decision ultimately made by the husband, this of itself did not automatically mean that the husband was acting without good faith, particularly when there was no other evidence to support the allegation; and
6. Ultimately, a court will only review the way in which the discretion of a trustee is exercised in very limited circumstances.

Next week’s post will provide commentary on the outcome of an appeal of the original decision.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the James song ‘Ring the bells’.

View hear (sic):

Time** (to be challenging a BDBN)

Previous posts have considered various aspects of BDBN.

The case of Wooster v Morris [2013] VSC 594 provides another example of some of the key issues around the enforceability of a BDBN.

In summary:

1. A husband and wife were the trustees and members of an SMSF;
2. The husband had two adult daughters from a previous relationship;
3. The husband had made what was ultimately accepted to be a valid BDBN to his adult daughters, who were also the executors of his will;
4. The husband's wife, following his death, sought to challenge the BDBN on the basis of a technicality that the trust deed required it to be delivered to her and she claimed that it had not been;
5. Practically, as the wife was the sole surviving trustee and was able to regulate the appointment of the new trustee (ignoring the claims of the daughters as executors of the will), she paid the entire death benefit to herself; and
6. After a drawn out (and expensive) litigation, the wife was required to return all funds and also contribute personally to the costs of the litigation.

While there are obviously many consequences that flow from this decision, perhaps the three most important are:

1. despite many cases to the contrary that require the provisions of a trust instrument to be followed precisely in order to ensure validity, there will be exceptions to that rule;
2. unless otherwise provided for in the trust instrument, the executors of a deceased member's estate will not automatically have any legal entitlement to a role in the control of an SMSF; and
3. who has practical control of an SMSF can be critical, regardless of the strict legal position (or in other words, possession can often equate to 9/10ths of the law).

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the Culture Club song ‘Time (clock of the heart)’.

View hear (sic):

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.

As usual, please contact me if you would like access to any of the content mentioned in this post.

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

(Quick) Succession** with super fund trusteeship on death

Recent posts have considered the various issues that can arise in relation to the payment of superannuation entitlements following death.

The case of Ioppolo & Hesford v Conti & Anor [2013] WASC 389 provides another example of how unintended consequences can arise where the control of a self managed superannuation fund (SMSF) is not carefully considered as part of a comprehensive estate plan.

The background of the case was as follows:

1) the husband and wife originally established an SMSF and were the individual trustees;

2) following the wife’s death, the husband appointed a corporate trustee (not the legal personal representative of his wife’s estate) of which he was the sole director and shareholder in order to comply with the relevant superannuation legislation;

3) the corporate trustee (with the husband as sole director), then resolved to pay the entirety of the wife’s superannuation entitlements to the husband, as opposed to her legal personal representative pursuant to her will;

4) the executors of the will sought to unwind the distribution, partly because of a direction in the will that related to the superannuation entitlements;

5) in particular, the executors argued that the husband failed to act in a bona fide manner because of the provision in the will.
In dismissing the executor’s claim and allowing the husband to retain all of the wife’s superannuation entitlements, the court confirmed that there is no obligation under the superannuation legislation for a surviving trustee to automatically appoint the executors of a former co-trustee as replacement trustees of an SMSF.

In many ways, the decision simply reinforces the principle from the Katz v Grossman case some years earlier.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the Elliott Smith song ‘Bled White’. View hear (sic): 

What you need** with super death benefit planning

Last week’s post considered the case of Katz v Grossman.

Earlier posts have considered the various types of superannuation death benefit nominations that can be made.

Clearly if the father in Katz v Grossman had utilised a binding death benefit nomination, then there would likely have not been any successful challenge to the ultimate payment of the superannuation entitlements

Some of the other planning strategies that can be utilised to regulate how superannuation benefits are distributed on death include:

1) incorporating automatic adjustment clauses under the terms of a will, to take into account benefits that are received directly from a superannuation fund;

2) mandating the succession of trusteeship of the superannuation fund; and

3) entrenching approval mechanisms for death benefit payments, for example, by prohibiting a payment until trustee receives consent from a trusted third party.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the INXS song ‘What you need’. View hear (sic):

  

The Original (Sin)** and super death benefits - the Katz decision

Superannuation entitlements are regularly one of the most significant assets in any estate planning exercise.

Critically however, superannuation benefits need to be regulated in a way that complements a wider estate planning exercise. Arguably, one of the leading cases in relation to superannuation death benefit planning remains, after more than 15 years, the decision in Katz v Grossman [2005] NSWSC 934.

The case involved Katz bringing an action against his sister Grossman (and her husband), claiming an interest in their father’s self managed superannuation fund (SMSF).

A summary of the facts is as follows:

1. originally, the father and mother were the individual trustees of the SMSF;
2. the mother died some years before the father, and subsequently Grossman was appointed as a co-trustee with the father (this was to ensure that the SMSF continued to comply with the relevant superannuation legislation);
3. when the father later died, Grossman appointed her husband as a co-trustee with her;
4. during his lifetime the father had made a non-binding nomination indicating that he wanted his superannuation entitlements divided equally between Katz and Grossman; and
5. Grossman and her husband ignored the nomination and paid the entirety of the superannuation entitlements for the benefit to herself.

The Court held that all the trustees of the SMSF had been validly appointed at the relevant times, and that as a result, the challenge by Katz was unsuccessful and Grossman was entitled to keep the superannuation entitlements.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the INXS song ‘Original Sin’. View hear (sic):

‘Retro’** witnessing of wills and BDBNs: AKA no one knows you weren’t there, until it is a problem

Witnessing rule

A fundamental aspect to create a valid will, and indeed most binding death benefit nominations, is that there must be two witnesses and they must be present and observe the willmaker sign (and date) the document.

The rule in this regard is inflexible, particularly where a lawyer is involved.

Background

The decision in the case of Lewis v Lewis [2020] NSWSC 1306 is another stark reminder of the legal system’s view of ideas such as backdating, witnessing without witnessing, retro-dating, retro-witnessing and similar ‘near enough is good enough’ strategies.

In particular, one of the key aspects of the case for advisers involved an analysis of the requirements of signing a will validly

Factual matrix

Relevantly in relation to the witnessing aspect, the factual matrix in Lewis involved a son who was a qualified lawyer and prepared a will on behalf of his mother.

Likely realising that if he was one of the witnesses he would be automatically excluded from taking any benefit under the document (see Hill trading as R F Hill & Associates v Van Erp (1997) 188 CLR 159), he arranged for 2 neighbours to be the witnesses.

After handing the will to his mother and explaining the witnesses would be over later in the day the son went out.  When he returned his mother had gone to bed, leaving the will, signed, on a table in the lounge room.

When the witnesses arrived the son told them that his mother had already signed the will and gone to bed and said 'This is not the right way to witness the will but I will have to deal with it at a later stage. Do you mind signing anyway?'. 

Court’s view

The approach the son suggested at least somewhat reminiscent of the conduct nab found itself in trouble over for regularly allowing advisers to witness binding death benefit nominations with only one witness in attendance - and a second witness later signing; despite not actually having been present.

During the hearing when the lawyer was questioned as to why he had knowingly procured false attestations, he evidently did not seem especially troubled - and indeed responded by saying he offered the witnesses a choice and that they could always have refused if they were worried.

The court confirmed its view that the lawyer's conduct was completely unsatisfactory and it was grossly improper of him to ask the witnesses to make solemn statements that they had witnessed the willmaker signing the will when in fact they had not.

Furthermore, the attempt to deflect blame on to the witnesses was described as 'positively discreditable'. 

Ultimately, the court concluded that the conduct of the lawyer may have justified referral to the Law Society for consideration of disciplinary action, although gave the lawyer the right to make submissions against this occurring.

Based on the decision in Council of the Law Society of New South Wales v Renfrew [2019] NSWCATOD 63, there is every chance of disciplinary consequences.  In that case a lawyer was the only witness to a will at the time the willmaker signed, and then arranged for a second witness to sign some period of time later (after the willmaker had died), before then attempting to mislead the court on a probate application that both witnesses had in fact been present.  Although there were other issues of concern, this aspect was held to amount to professional misconduct.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, the title today is riffed from the Silverchair song ‘Insomnia’. 

View here:

https://www.youtube.com/watch?v=BEpqbyl-XFM

PS: the original version of this article appears SMSF Adviser Magazine, see here: https://www.smsfadviser.com/strategy/19394-pre-signing-of-wills-and-bdbns-another-warning

BDBNs v reversionary pensions – it’s not enough to debate **

Last week’s post (Scissors, paper, rock (you win again) – BDBNs v pensions **) considered the situation where there is a binding death benefit nomination (BDBN) in place for superannuation savings that are also the subject of a reversionary pension

As with many areas of potential conflict, the starting point for an answer to this type of situation will be the terms of the trust deed and pension documents.

In the absence of a clear answer in the legal documents (and as mentioned briefly last week), the Tax Office’s position appears to have been confirmed via a National Tax Liaison Group (Superannuation Technical Sub-group) in March 2010.

The minutes confirm as follows:

‘There are no SIS Act or SISR provisions that are relevant to determining which nomination an SMSF trustee is to give precedence where a deceased pension member had both a valid reversionary nomination and a valid BDBN in existence at the same time of the member’s death.

While section 59 of the SIS Act and Regulation 6.17A of the SISR place restrictions on superannuation entity trustees accepting BDBNs from a member, as explained in SMSF Determination SMSFD 2008/3, the Commissioner is of the view that those provisions do not have any application to SMSFs.

It must also be remembered that section 59 of the SIS Act and regulation 6.17A of the SISR are necessary because of the general trust law principle that beneficiaries cannot direct trustees in the performance of their trust.

The ATO’s view is that a pension that is a genuine reversionary pension, that is, one which under the terms and conditions established at the commencement of the pension reverts to a nominated (or determinable) beneficiary must be paid to the reversioner.

It is only where a trustee may exercise its discretion as to which beneficiary is paid the deceased member’s benefits and/or the form in which the benefits are payable that a death benefit nomination is relevant.’

** For trainspotters, ‘It’s not enough to debate’ is a line from a song named ‘Weenie Beenie’ on the first Foo Fighters album in 1995, listen here – https://www.youtube.com/watch?v=oI1xAkzHgXc

Image courtesy of Shutterstock

Scissors, paper, rock (you win again) – BDBNs v pensions **

An issue that has been the subject of some debate over time is what takes priority where a valid binding death benefit nomination (BDBN) is in place, however the relevant member dies while in receipt of a pension which was established with a reversionary beneficiary.

Best practice dictates that both documents should ideally articulate which has priority, although often there is however ambiguity.

Where however there is limited guidance addressing the issue, it is generally accepted that the reversionary pension will take precedence over the BDBN.

The reasons for this include:

1. A valid reversionary pension would automatically remove the deceased member’s death benefits from a fund, and therefore, any BDBN will have no assets to attach to. 
2. The Tax Office has confirmed via its national tax liaison group committee that the preferred interpretation (subject to any specific provisions to the contrary) is that the pension does take priority. 
3. Practically, in the client specific situations that we have seen, the approach adopted has always been that the reversionary pension takes priority. 

** For trainspotters, ‘You Win Again’ is song by legendary band the Bee Gees, learn more (including about mullet hair styles, circa 1987) here – https://www.youtube.com/watch?v=KZY9oYSSjFI

Image courtesy of Shutterstock

(To be) specific asset BDBNs **

As highlighted in previous posts, there are a myriad of issues that should be taken into account before a binding death benefit nomination (BDBN) will be held to be valid (see for example - http://blog.viewlegal.com.au/2012/02/superannuation-and-binding-death.html, http://blog.viewlegal.com.au/2014/03/death-benefit-nominations-read-deed.html, http://blog.viewlegal.com.au/2014/03/double-entrenching-binding-nominations.html).

One issue that can arise is whether a BDBN can apply to specific assets, as opposed to simply nominating a percentage of total assets, which is the standard approach for most nominations.

The generally accepted position seems to be that given there is nothing in the superannuation legislation that prevents distributing specific assets under a BDBN, so long as the trust deed for the fund does not prohibit it, the approach is permissible.

If a specific asset BDBN is desired, it will also be necessary to ensure practical issues such as the following are addressed –

1. the relevant asset must be segregated to the account of the member making the BDBN;
2. compliance with all aspects of the BDBN rules under the trust deed;
3. the various issues that should be factored into any BDBN, including changes in the values of assets, the wider estate plan, what is to occur if the intended recipient predeceases the person making the BDBN and the revenue consequences; and
4. finally, the scenario where the asset the subject of the specific asset BDBN is sold prior to the member’s death should also be contemplated.

** For trainspotters, ‘To be specific’ is a line lifted from the song ‘Fidelity Fiduciary Bank’ from Mary Poppins, see here – https://www.youtube.com/watch?v=XxyB29bDbBA

Image courtesy of Shutterstock

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

Another View Legal Apple and Android app launched

Following the successful launch earlier this year of the View Legal Directors Duties, Estate Planning and business succession apps, we have now developed and launched a further Apple and Android app.

The new app is in relation to binding death benefit nominations (BDBN) and can be downloaded via the following links –

1. iPhone – https://itunes.apple.com/au/app/bdbn/id931237201?mt=8
2. Android - https://play.google.com/store/apps/details?id=view.legal.bdbn

BDBNs can be an essential tool for anyone with superannuation savings.  BDBNs are however heavily regulated and there are many aspects that can cause irreversible damage if misunderstood.

The app explores some of the fundamental issues that arise for anyone with superannuation savings considering making a BDBN.

Depending on the answers provided, the app generates a free white paper containing general information in relation to some of the issues that are often relevant.

Until next week.