People are becoming increasingly aware of the importance of having a Binding Death Benefit Nomination in place. A Binding Death Benefit Nomination can help determine who receives your superannuation when you die.
Your superannuation does not generally form part of your estate.
Instead, the trustee of your superannuation fund will usually decide how to pay your superannuation death benefit. A valid Binding Death Benefit Nomination can direct the trustee to pay the benefit to the people you have nominated, subject to the rules that apply to your fund.
You must meet certain requirements for a nomination to remain valid. The requirements can also depend on the type of superannuation fund and its governing rules.
In some circumstances, a Binding Death Benefit Nomination can lapse after three years.
But what happens if the nomination has lapsed and the member has lost mental capacity? What if they can no longer make a new nomination themselves?
This issue has important implications for estate planning and Enduring Powers of Attorney.
Can an attorney renew a Binding Death Benefit Nomination?
An attorney may be able to take steps concerning a Binding Death Benefit Nomination after a member loses capacity. However, the answer depends on the particular circumstances.
Two documents are particularly important:
- the superannuation fund’s Trust Deed or governing rules; and
- the member’s Enduring Power of Attorney and the authority it gives the attorney.
The Queensland Supreme Court has considered this issue in the context of a member who had lost capacity.
The Court looked at whether the attorney had authority to deal with the member’s Binding Death Benefit Nomination. It also considered the rules of the relevant superannuation fund.
What happens when a Binding Death Benefit Nomination lapses?
A Binding Death Benefit Nomination may lapse depending on the rules that apply to the particular superannuation fund.
For certain regulated superannuation funds, regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 deals with binding death benefit nominations.
However, you should not assume that every Binding Death Benefit Nomination automatically expires after three years. The governing rules of the particular fund must be checked.
This distinction is particularly important for self-managed superannuation funds. In Hill v Zuda Pty Ltd [2022] HCA 21, the High Court of Australia considered whether regulation 6.17A applied to a self-managed superannuation fund and confirmed that it did not automatically apply to SMSFs.
What if the member has lost capacity?
The situation becomes more complicated when a member loses mental capacity.
If the member can no longer make or update their own nomination, the attorney may need to consider whether they have authority to act.
The wording of the Enduring Power of Attorney can therefore become very important.
Wakerley Legal’s article about an expired superannuation nomination and loss of capacity discusses this issue in more detail.
What did the Queensland Supreme Court decide?
In Re Narumon Pty Ltd [2018] QSC 185, the Queensland Supreme Court considered a member who had lost capacity after making a Binding Death Benefit Nomination.
The nomination had lapsed before the member died.
The member had also appointed attorneys under an Enduring Power of Attorney.
The Court considered whether those attorneys could act for the member in relation to the Binding Death Benefit Nomination.
In particular, the Court considered:
- the superannuation fund’s Trust Deed; and
- the contents of the Enduring Power of Attorney, including the authority it gave the attorneys.
The Court found that the attorneys could confirm and extend the existing Binding Death Benefit Nomination in the circumstances of that case.
However, the Court did not give the attorneys an unrestricted power to make a new nomination.
This distinction is important. An Enduring Power of Attorney does not automatically give an attorney unlimited authority to change a person’s superannuation death benefit arrangements.
The High Court’s decision in Hill v Zuda also demonstrates why the governing rules of the particular superannuation fund need careful consideration.
Why the wording of the Enduring Power of Attorney matters
A later Queensland Supreme Court decision considered the issue further.
In Re Rentis Pty Ltd [2023] QSC 252, the Enduring Power of Attorney expressly authorised the attorneys to renew any Binding Death Benefit Nomination made by the member.
The Court considered what the word “renew” meant in that particular Enduring Power of Attorney.
The Court found that, in the circumstances of that case, the authority to renew could extend to making a fresh Binding Death Benefit Nomination to address changed circumstances.
This decision highlights why the wording of an Enduring Power of Attorney matters.
You should not assume that every Enduring Power of Attorney gives an attorney the same authority.
Wakerley Legal’s Wills and Estate Planning service includes Enduring Powers of Attorney and superannuation nominations, including Binding Death Benefit Nominations.
What should you check if a member has lost capacity?
If a member has lost capacity, several documents may need to be reviewed.
1. Check the superannuation fund’s governing rules
First, check the fund’s Trust Deed or other governing rules.
These rules can determine whether the fund permits Binding Death Benefit Nominations and what requirements apply to making, confirming or renewing a nomination.
2. Check the existing Binding Death Benefit Nomination
Next, check the existing nomination.
Consider who the member nominated and when they made or last confirmed the nomination. You should also establish whether the nomination remains valid.
3. Check the Enduring Power of Attorney
Review the Enduring Power of Attorney carefully.
Consider what authority it gives the attorney over the member’s financial affairs. Also check whether it gives the attorney specific authority to deal with superannuation or Binding Death Benefit Nominations.
4. Check the broader estate plan
Finally, consider whether the superannuation arrangements still fit with the member’s broader estate plan.
The Will, Enduring Power of Attorney and superannuation nominations should work together wherever possible.
Why should you review your Enduring Power of Attorney?
It is important to regularly review and update your estate planning.
You should also consider whether your Enduring Power of Attorney gives your attorney appropriate authority to confirm, extend or renew a Binding Death Benefit Nomination.
The Queensland Powers of Attorney Act 1998 provides the legislative framework for powers of attorney in Queensland.
The wording of the Enduring Power of Attorney should also be considered alongside the rules of the relevant superannuation fund.
The Queensland cases show that an attorney’s authority can depend on the wording of the document and the circumstances of the particular matter.
What should an Attorney do?
Anyone appointed as an Attorney should carefully consider what steps they may need to take.
This can help prevent the person’s estate-planning arrangements from being disrupted.
An Attorney should consider whether:
- the member has an existing Binding Death Benefit Nomination;
- the nomination remains valid;
- the nomination has lapsed;
- the superannuation fund’s governing rules allow an attorney to renew or change the nomination;
- the Enduring Power of Attorney gives the attorney sufficient authority;
- any restrictions or potential conflicts affect the attorney’s ability to act; and
- the proposed arrangements remain consistent with the member’s broader estate plan.
Binding Death Benefit Nominations and loss of capacity: key points
- A Binding Death Benefit Nomination can form an important part of an estate plan.
- Superannuation does not generally pass under a Will in the same way as assets that form part of the estate.
- A Binding Death Benefit Nomination may lapse, depending on the rules that apply to the fund.
- You should check the governing rules of the particular superannuation fund.
- Different rules can apply to self-managed superannuation funds.
- An attorney may be able to deal with a Binding Death Benefit Nomination after a member loses capacity.
- The attorney’s authority depends on the relevant documents and the circumstances.
- The Queensland Supreme Court decisions show why the wording of an Enduring Power of Attorney matters.
- Your Will, Enduring Power of Attorney and superannuation arrangements should form part of a coordinated estate plan.
Wakerley Legal also assists clients with superannuation death benefit claims, including situations where a dispute arises about the payment of superannuation benefits.
Frequently asked questions
What is a Binding Death Benefit Nomination?
A Binding Death Benefit Nomination is a direction made by a superannuation member about who should receive their superannuation death benefit.
The nomination must meet the requirements that apply to the particular superannuation fund.
Where a valid binding nomination applies, the trustee must deal with the benefit in accordance with the nomination, subject to the applicable law and fund rules.
Does a Binding Death Benefit Nomination always expire after three years?
No. You should not assume that every Binding Death Benefit Nomination expires after three years.
Regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994 applies to certain regulated superannuation funds. However, the rules applying to self-managed superannuation funds can differ.
The governing rules of the particular fund should therefore be checked.
Can an Enduring Power of Attorney renew a Binding Death Benefit Nomination?
An attorney may be able to renew a Binding Death Benefit Nomination in some circumstances.
The answer depends on the authority given under the Enduring Power of Attorney, the rules of the superannuation fund and the circumstances of the particular matter.
Can an Attorney make a new Binding Death Benefit Nomination?
You should not assume that an attorney can make a completely new nomination.
In Re Narumon Pty Ltd, the Queensland Supreme Court allowed the attorneys to confirm and extend an existing nomination in the circumstances of that case. The Court did not grant the relief sought in relation to a new nomination.
In Re Rentis Pty Ltd, the Court considered an Enduring Power of Attorney that expressly authorised the attorney to renew a Binding Death Benefit Nomination. In that particular case, the Court found that the authority could extend to a fresh nomination addressing changed circumstances.
Why should a Binding Death Benefit Nomination be reviewed with an Enduring Power of Attorney?
Your estate-planning documents need to work together.
If you lose capacity, you may no longer be able to update your own superannuation nomination.
An appropriately drafted Enduring Power of Attorney may therefore help your attorney deal with relevant matters later, subject to the fund’s rules and the applicable law.
Should I review my Binding Death Benefit Nomination regularly?
Yes. Your circumstances and estate plan can change over time.
Marriage, separation, divorce, the birth or death of a beneficiary, changes to your superannuation or changes to your broader estate plan may all justify a review.
Wakerley Legal also recommends reviewing your Will and Enduring Power of Attorney when your circumstances change.
Conclusion
It is important to consider your superannuation as part of your overall estate plan.
Your Will, Enduring Power of Attorney and Binding Death Benefit Nomination each serve different purposes. They should also work together where appropriate.
Loss of capacity can make changes to a Binding Death Benefit Nomination more complicated.
The Queensland Supreme Court decisions show why you should carefully consider both the superannuation fund’s governing rules and the wording of the Enduring Power of Attorney.
Taking the time to review these documents while you still have capacity can help ensure that your estate-planning arrangements continue to reflect your wishes.
If you would like to review your Will, Enduring Power of Attorney or superannuation nominations, contact Wakerley Legal to discuss your circumstances.