Legal Tip 169: What is a Binding Death Benefit Nomination (BDBN)?

Its good to study and think about, but I wouldn't get them to worry too much as you could change your will many times before your death. Most people don't tell their executors that they have even been nominated as executors and they don't find out until after the death. (I think it is good to tell them now).

 

Not letting a person know you'd like them to be your executor is an strange attitude to me. What if they don't wish to act in that capacity? Darn stupid to appoint that individual in that case. People seem so coy and reluctant to address an event which will happen at some stage.

I also find it strange many automatically appoint a relative which may not be the best idea. I have the view you'd only ask someone to take up that role if you had faith in their judgement. It doesn't necessarily follow that a close relative has that capacity.

Anyways, the person I've appointed will peruse the clauses in my Will but recognises they may need seek expert advice when the time comes.

 

Very interesting, Terry. I recall a news story recently where a family had been in the courts fighting over this sort of issue, as the trustee had given a significant amount of a person's super to his new de facto spouse, instead of giving all of it to his children. If I recall he wanted all the money to go to his children in his will, but the trustee made a different decision. Sounds like having one of these BDBNs is what he should have done, had he wanted to be sure of all his money going to his daughters.

 

I had one friend die and the person he appointed as executor got cold feet, when it come to the crunch he pulled out. This was despite agreeing to do it about a month prior. It is easy to say yes, but there is considerable personal risk and hassle and when they realise this they get scared off. Family on the other hand feel obligated to stick with it.

 

I can't remember the name of the case but I think this one the man had a new wife and children from a previous wife. He did do a BDBN but the new wife ended up controlling the SMSF and as trustee she said the BDBN was not valid. They went to court and the court said it was valid - prob $100,000 wasted on barristers and legal fees - worn by the fund probably.

So a BDBN is only half the story with a SMSF. The other half is arranging control to fall into the right hands.

 

Recent case - No Cookies | The Courier Mail

I reckon SMSF binding nominations are only as good as someone NOT tearing it up or an independent person being in possession at the time when action is needed. eg New wife reads her deceased hubby leaves it all to his kids. She rips up the nomination.

So important that the nomination and will be held by a solicitor to prevent this. If they were all held together its better

 

Seemed logical approach to me. Original of Will, EPA and copy of BDBN held by solicitor (I hold certified copies as does my Attorney). Copy of Will, EPA and BDBN held by FP/Accounting firm. About as much as I reckon I could do.

 

@Terry_w @Paul@PFI Can a BDBN (Pooled Super Fund) be made to a minor (dependant) but "in trust" of someone that isn't the legal guardian of the minor?

 

Yes