Binding Death Benefit Nominations: Traps to Look Out For

A 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.

I’m Leaving on a Jet Plane

As international travel is set to resume after, nearly a two-year pandemic induced hiatus, we turn our attention to the law regarding traveling or removing a child from Australia. Unlike the words penned by virtuoso John Denver in his famous 1966 song, it is not as simple as “I’m leaving on a jet plane” and certainly not “I don’t know when I will be back again.”

Under the provisions of the Family Law Act, parents have a presumption of equal parental responsibility. This presumption remains until a Court orders otherwise.

When separated parents wish to travel internationally with their child or children, they must be aware of the Family Law Act 1975 Section 65Y, which prohibits a parent/guardian from removing a child from Australia unless:

1. It is done with the authorisation and written consent of each of the parents/guardian; or

2. A Court Order has been made to allow such to occur.

Violation or breach of Section 65Y is a criminal offence. The penalty can be imprisonment for up to three years.

The exemptions to Section 65Y depend on the circumstances but generally only occur when the person removing a child from Australia:

1. Believes it is reasonably necessary to prevent the child being subject to family violence; and

2. The conduct is reasonable in the circumstances as the person perceives them.

As previously mentioned, if a parent or guardian cannot agree and written consent is not granted, an application to the Court must be made. Such Court must have jurisdiction to make Orders in accordance with the Family Law Act. The Court will consider, when adjudicating on an application for international travel, inter alia the following:

1. If it is in the best interest of the child to travel internationally;

2. If there a risk of a child’s relationship being disrupted or terminated with the non-travelling parent during the time of travel; and

3. If there a risk that the child will be detained in a foreign country or, not being returned to the child’s primary place of residency.

It is my intention to write a further advertorial where I will examine the remedies available to prevent a parent from removing a child from Australia or, in extreme circumstances, commencing proceedings to return a child from an overseas country.

For advice and assistance on all matters associated with Family Law disputes, contact Everingham Solomons where Helping You is Our Business.