What is a binding death benefit nomination for super in Australia?
A binding death benefit nomination for superannuation in Australia legally directs your super fund on who receives your super balance upon your death. It ensures your chosen beneficiaries, such as dependants or your legal personal representative, receive your super benefits without the fund's discretion.
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How it works in practice
Understanding Binding Death Benefit Nominations
A binding death benefit nomination (BDBN) is a formal instruction you provide to your superannuation fund, specifying exactly who you want to receive your super benefits when you die. Unlike a non-binding nomination, which serves as a guide for the super fund's trustee, a BDBN legally compels the trustee to pay your super benefits to your nominated beneficiaries, provided the nomination is valid.
Why Make a Binding Nomination?
The primary reason to make a BDBN is to ensure your super benefits are distributed according to your wishes, removing uncertainty and potentially preventing disputes among family members. Without a valid BDBN, your super fund's trustee has discretion over who receives your super death benefits, subject to superannuation law. This discretion might not align with your preferences or your Will.
Validity and Review
For a BDBN to be valid, it must meet strict legal requirements, including being in writing, signed by you, dated, and witnessed by two people who are not your nominated beneficiaries. Most BDBNs have an expiry date, typically three years from the date they are made or last confirmed, after which they lapse and become non-binding. It is crucial to regularly review and reconfirm or update your BDBN to ensure it remains valid and reflects your current wishes, especially after significant life events like marriage, divorce, or the birth of children.
Important exceptions
Binding death benefit nominations are subject to strict legal requirements; if not correctly completed, they can be deemed invalid and lapse, allowing the super fund trustee discretion. They typically expire after three years unless renewed, requiring proactive management. Only financial dependants (e.g., spouse, children under 18) or your Legal Personal Representative (your Estate) can be nominated, limiting who can directly receive benefits. If a nominated beneficiary is not a dependant for tax purposes, they may incur higher tax on the death benefit.
What you should do now
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Review your super fund's specific BDBN form and requirements.
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Clearly identify your chosen beneficiaries (e.g., spouse, children, legal personal representative) and their allocation percentages.
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Complete the form accurately, ensuring it is dated and signed by you.
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Have the form witnessed by two eligible individuals (not beneficiaries) and ensure they sign and date it.
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Submit the completed and witnessed form to your superannuation fund and keep a copy for your records, setting a reminder to review it before its expiry.
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