Detailed BDBN document search key

BDBN documents search

Attempts to locate binding death benefit documents must go beyond a superficial search for them if trustees are to satisfy their legal obligations.

A legal firm specialising in superannuation has reminded practitioners to ensure their clients are aware of the substantial efforts that must be made in the search for any SMSF documents confirming a binding death benefit nomination (BDBN).

“This is [about] what the trustee needs to do to discharge its duty [and] it’s not just [a matter of going to the] lawyer and make sure they check the will records on file. [The trustees] need to do a thorough search of all the typical places where those documents might be located,” Cooper Grace Ward partner Clinton Jackson told attendees of the firm’s 2023 Annual Adviser Conference held last week.

“[This includes checking with] the [fund’s] current lawyer, the accountants, the filing cabinets and all of those [places] to make sure we’ve done everything we can to locate those documents because it’s going to be really embarrassing for the trustee if you perform a higher level [search], decide to pay the death benefit and then all of a sudden someone is able to produce a document that you should have found.”

He pointed out the process cannot be left at just carrying out a search for the BDBN documents either in the event the death benefit payment is legally challenged.

“[You should also] actually keep some record of where you’ve gone and looked. That’s really important because you might need to be able to establish later that you’ve done enough to convince a court you’ve actually tried your best,” he advised.

Fellow Cooper Grace Ward partner Scott Hay-Bartlem noted from an advisory point of view best practice would involve keeping any binding death benefit documents in as many physical locations as possible.

“It’s really important to make sure copies of those binding death benefit or pension [papers] are spread around so we can easily find one,” Hay-Bartlem said.

While suggesting filing multiple copies of death benefit nomination documents, he acknowledged the superannuation laws did not dictate these items have to be issued to anyone in particular.

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