Trustees often forget their role in disputes involving a binding death benefit nomination (BDBN) and it is an adviser’s responsibility to walk them through that duty, according to an estate dispute practitioner.
Cooper Grace Ward partner Hayley Mitchell noted trustees have obligations to the beneficiaries of a fund and potentially to those who may receive death benefits, and need to remember those instead of taking sides.
“The number one mistake I see trustees make when they’re looking at these issues is they forget they’re a trustee,” Mitchell said at the recent SMSF Association National Conference 2025 in Melbourne.
“In the self-managed super fund world we’re dealing with family members that have an interest in where the death benefit is paid and the trustee forgets about their trustee role and just sees the money and wants to get the end result they want.
“If they don’t undertake their role properly or they breach their duties, then they’re going to have adverse consequences.”
She said trustees could be assisted by advice practitioners as to what steps they should be taking when a dispute occurs.
“If we’ve got a technical issue with the binding nomination, but everyone agrees about how the death benefit is to be paid, happy days, we don’t need to go off and make court applications that are unnecessary,” she said.
“What I’m talking about here are circumstances where people are going to fight about it and for trustees we want to make sure that they’re undertaking a proper process.
“First, are they getting specialist advice to identify what the issues are?
“If we’re dealing with a trustee needing to exercise discretion about how a death benefit should be paid, are they undertaking the proper process to identify the interested beneficiaries and the process to make their decision or how they should exercise their discretion?”
She noted it would not always be possible to resolve disputes given some trustees would be unable to identify or carry out their obligations.
“Are we dealing with any conflicts of interest, such as trustees and executors wearing different hats?” she said.
“Sometimes the trustee can’t sort all of these issues out themselves or deal with it simply by relying on legal or specialist advice and there are scenarios where they’re going to need to seek directions from the court about how they should undertake their role.”