SMSF members seeking to determine whether a binding death benefit nomination (BDBN) has precedence over a reversionary pension (RP) would be best served by having access to original paper documents instead of using electronic documents, according to an SMSF legal expert.
DBA Lawyers special counsel Bryce Figot said paper documents typically held more weight when looking at the issue of whether a BDBN or RP held precedence and electronic copies of SMSF documents still required proof they were an accurate record of physical documents.
Figot made the comments during a webinar late last week when addressing the use of BDBNs or RPs in an SMSF and said whichever position is to have precedence should be spelt out in paper documents.
“The short answer is you want the original physical documents. The direction that overrides any other position is what you want in the original document,” Figot said.
“In very limited circumstances the electronic version could be okay – and that is hard to say definitely – but if you have the full original physical version, that is definitely okay.
“It comes down to whether you want absolute certainty or a lengthy legal opinion and with the full physical version you have that certainty.”
He said SMSF trustees and advisers should keep physical versions and have an electronic copy in case the other is destroyed, but it was also important to ensure any claims the latter were exact copies would withstand scrutiny.
“If you say you have lost the document, or its been destroyed, but have an electronic copy and an affidavit stating ‘this is exactly what it looked like when it was made properly as the original’, that will be pretty good evidence if it comes from a professional person,” he said.
He added affidavits sworn by a lay person would be closely examined and pointed to a June 2021 court case where an affidavit was rejected by a judge who was not satisfied the person witnessing the deed had sufficient reason to be present at the time.
“For SMSF practitioners who see a deed, they will know what it is and know the details and those will make sense as it’s part of your daily fare, but if a lay person signs an affidavit, it will be treated with extreme scepticism,” he said.
