The partner of a law firm has recommended SMSF advisers honestly assess their capability in handling issues that may arise from a poorly drafted binding death benefit nomination (BDBN) and, if unable to resolve the matter, should consider delegating the task of finding a solution to legal specialists.
“We need to ensure we’ve got the technical expertise to actually advise the clients properly,” Cooper Grace Ward Lawyers partner Hayley Mitchell told advisers at the recent SMSF Association National Conference 2025 in Melbourne.
“But what about if we don’t? If you’re an accountant or financial adviser who is regularly involved in a client’s estate planning, that’s excellent, but you also need to make sure you’ve got a relationship with a solicitor that you trust and has those skills to deal with superannuation and succession planning adequately.”
According to Mitchell practitioners need to consider their own potential liability if there are problems with a BDBN and how a court would view rule on the situation.
“The client is the member of the self-managed super fund. If we bugger up the estate plan or the binding nomination, it’s not our member client that suffered the loss, but it’s the intended beneficiary that should have received the superannuation but hasn’t because of whatever the issue might have been,” she explained.
“I think if the courts are asked to look at this in the context of a binding nomination, they’re going to have a look at the legal precedents for wills.
“A solicitor who negligently prepares a will is liable for the loss suffered by the beneficiary, even though that beneficiary is not their client.
“That’s probably where we would see the law go if the court was asking the same question about a binding death benefit nomination.”
“So what we need to be asking ourselves is if we don’t have specialised knowledge do we then have the expertise to advise on, after death, how the court might interpret the terms of this trust deed or BDBN?
“In terms of advisers that are not solicitors, whether you prepare binding nominations yourselves, is going to come down to whether you’re willing to accept that liability.
“If you don’t want to take on the potential liability that comes with buggering up the binding death benefit nomination, get the lawyer to do it.”