Headshot of Nick Hawkins - Solicitor at Everingham Solomons TamworthA Binding Death Benefit Nomination (BDBN) is a document that allows you to decide who will receive a benefit from any Superannuation you have accrued at the time of your death. Making a BDBN is an essential part of estate planning. A lot of people are not aware that their superannuation will not automatically be distributed through their Will. If you have seen a solicitor to create or update your Will, it is also worthwhile making a BDBN.

There are three main traps to look out for when making a Binding Death Benefit Nomination:

1. Make sure the nomination you have made is in fact binding. Superfunds will often offer binding and non-binding options. If you only have a non-binding nomination your superfund is not bound to follow your directions and they can use their discretion to decide how your superannuation is divided among your family. If you want to take the decision out of the hands of your superfund and ensure your wishes are followed, check the type of nomination you have made to confirm that it is binding.

2. The second trap of BDBNs is that they often lapse every three years. Some superfunds do offer non-lapsing nominations that are also binding. However, just like making a Will, your BDBN also needs to be reviewed every few years. A Binding Death Benefit Nomination that has expired is not enforceable, so it is important that you actively review the nomination and keep it up to date.

3. Not everyone is eligible to be nominated as a beneficiary of your superannuation. You can only nominate someone that is:
a. a dependant;
b. someone who is in an interdependent relationship with you (such as a partner or spouse);
c. your children, including:
i. stepchildren (provided the relationship between the child and their natural parent is not severed by death or divorce);
ii. adopted children; and
iii. adult children; or
d. your legal personal representative (such as the executor of your Will)

If you nominate your legal personal representative your superannuation will be directed to your executor(s) who must distribute it in accordance with your Will. This is the only way to direct your superannuation to someone that does not fall into one of the above categories.

When you make your BDBN your superfund will not know if the people you have nominated fit into one of these categories and will automatically assume you have made a valid nomination. Only once the BDBN comes into effect will the superfund consider your nominations. Anyone nominated that does not come under one of the above categories cannot receive a benefit from your superannuation and your nomination will be invalid.

If you need assistance or advice regarding Binding Death Benefit Nominations or other estate planning issues contact a solicitor at Everingham Solomons because Helping You is Our Business.

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