Each revision of a binding death benefit nomination (BDBN) should be checked against an estate plan to ensure it continues to match the latter’s overall outcomes and not be undermined by other vehicles such as a will, according to two specialist lawyers.
Cooper Grace Ward associate Sarah Camm said the case of Re Rentis Pty Ltd [2023] QSC 252 highlighted the confusion that can occur when a will states specific benefits should be paid by a BDBN, but that latter document is subject to review.
Speaking at the legal firm’s Annual Adviser Conference in Brisbane last week, Camm noted the SMSF at the centre of the case had four BDBNs created in regards to its death benefits – two by a fund member, Robert, and two by his attorney under an enduring power of attorney.
“The last BDBN was found to be valid. Did the will still work at that stage because it said: ‘If I do not have a BDBN, I want my executor to work with the trustee of my superannuation fund to make sure that $200,000 is paid to each of my children and stepchildren, and the rest goes to two charities,’” she said.
“There was a BDBN, however, and the will added in this case ‘the BDBN will have directed $200,000 to each of my children and stepchildren, so any superannuation is to go to the residue’.”
She noted this is not what took place and rather the fourth and final BDBN directed 50 per cent of death benefits to the estate and 25 per cent each to the member’s own children.
Cooper Grace Ward partner Clinton Jackson added the problems Camm faced in working out how the BDBN applied in conjunction with the will meant every person involved with a BDBN after the first one should have reviewed the member’s estate plan.
“Does this match in with what is there? What is the outcome you’re looking to achieve overall, not just for the binding nomination?” Jackson said.
“If someone had file notes about this stuff, it would have made Sarah’s job in terms of having this will interpreted a lot easier because we would then have some consistent instructions around what Robert actually wanted to achieve.
“It also highlights the importance of holistic estate planning. When we look at these things, we want to build in contingencies in case something goes wrong.
“This will could have had a clause in it that said: ‘If super is received by my estate, I want $200,000 to go to each of the kids, however, that $200,000 is to be reduced by any super they’ve received directly outside.’
“So we could have the will actually work and not cause a double up, just by adding some additional wording in the gap that was left there by the existing drafting.”
