Death Benefit Nominations

Death Benefit Nominations and Binding Death Benefit Nominations (BDBN)

Binding and non-binding nominations

When you open a superannuation account, you are asked to nominate who you would like to receive your benefits when you die. These nominations can either be ‘binding’ or ‘non-binding’.

If you make a non-binding nomination, the Trustee of the super fund can exercise its discretion when it distributes your benefit. This means that your benefit may be distributed in a way that’s different to your intentions.

By making a ‘binding nomination’ the Trustee cannot exercise its discretion. BDBN is a direction to the trustee of a superannuation fund which binds them to pay death benefits to an eligible beneficiary or beneficiaries, or to your estate. Unless the BDBN is made to be non-lapsing it may lapse after 3 years if not renewed.

Many clients assume that they can transfer their superannuation benefit by their Will.   However, your superannuation benefit does not form part of your ‘estate’ unless you specifically nominate your estate or your personal legal representative.

Next time you are reviewing your estate planning strategy, be sure to include a review of your nominated beneficiaries.

The superannuation trust deed should include provisions allowing members to make BDBNs which may be tailored to account for various contingencies, such as the inclusion of cascading provisions to provide for alternate beneficiaries if one or more die before the fund member. A BDBN can also identify certain assets to be left to particular beneficiaries and, if permitted, nominate how benefits are to be paid such as by lump sum or pension.