SMSF legal firm DBA Lawyers will release a new SMSF trust deed that will allow fund trustees to execute a binding death benefit nomination (BDBN) without the need to have two witnesses present during its signing.
The new deed will be available from 4 May and has been developed in response to the limitations trustees and members may face in securing witnesses under the current social isolation measures in place in response to the COVID-19 pandemic.
The firm noted the pandemic had raised practical issues for SMSFs, including where members wishing to make a BDBN were being hampered by the requirement to have two independent witnesses present at the time of signing the deed.
“This can prove challenging if not impossible or illegal during these difficult and dangerous (COVID-19) times,” DBA Lawyers director Daniel Butler said in a statement provided to selfmanagedsuper.
“While we strongly recommend that this witnessing requirement should always be done, if practicable, we nevertheless want to provide documents that are effective and practical for our clients if obtaining witnesses proves problematic.
“Members can now make a BDBN without any witness. This means they can do this while isolated or with their family, in a hospital, nursing home, et cetera where witnesses are generally not available or willing to act.”
Butler said the new deed builds upon a previous version developed by the firm that expressly authorised a BDBN to be able to be made via technology and executed via a videoconference, with the addition that the new deed can also be executed without any witnesses.
“Under the DBA Lawyers SMSF deed, a BDBN can be executed in a practical and convenient manner while still being valid and legally effective,” he said, adding additional safeguards and instructions would be supplied to clients who use the document.
He said best practice for executing BDBNs would involve the physical presence of witnesses alongside the SMSF member and where all parties sign at the same time using the same pen, before the document is checked by the fund trustee and then securely stored with other legal documents belonging to the member.
“While this is best practice, this is not always practical and convenient. Thus, given the difficulty of obtaining witnesses especially during a pandemic, best practice for executing BDBNs may not be possible,” he noted.
“The DBA Lawyers SMSF deed provides flexibility as a member can now make a BDBN via technology, under our 2019/20 SMSF deed, or with or without a witness under our 4 May 2020 SMSF deed.
“We also strongly recommend that if a member completes a BDBN without two witnesses, that they execute a BDBN with two independent witnesses as soon as practicable thereafter.”
Butler has previously warned SMSF trustees and advisers to avoid legal documents that don’t have a solid backing claiming many would fail a legal challenge in court.
