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Can the trustee of my superannuation override my binding death benefit nomination?


A binding death benefit nomination (‘BDBN’) provides you the opportunity to inform the trustee of your superannuation fund who you would like to be the beneficiary of your superannuation benefit in the event of your death. As superannuation does not automatically form part of a person’s estate, superannuation funds encourage their members to lodge a BDBN as it provides certainty and peace of mind.


For a BDBN to be valid, those nominated must be a dependant. Superannuation law defines a dependant as a spouse, a biological or adopted child, any person that you have an interdependency relationship with.[1] If a BDBN is not provided, the trustee will use their discretion and pay your death benefit to the estate to be managed by the executor or provide it to your dependents according to the fund rules and legislation.


The recent successful claim of Magistrate Rodney Higgins shows that even if a BDBN is in place, the trustee of the superannuation fund can override it if it believes that it does not comply with the legislation.


Ms. Petrie and Mr. Higgins had been in a relationship for approximately seven months and living together for four. At the time of Ms. Petrie’s death, they had been engaged for five weeks.[2] Ms. Petrie nominated her mother as the recipient of her benefit after the relationship with Mr. Higgins began and at the time Ms. Petrie had been helping her mother financially.[3]


Mr. Higgins claimed that he was Ms. Petrie’s de facto, and as such was entitled to the benefit under the legislation. The trustee confirmed this and awarded him the benefit.

Ms. Petrie’s mother has appealed the decision, claiming that four months of cohabitation does not meet the standard of a de facto relationship, and as such, the trustee should have upheld the BDBN.


This case highlights the importance of not only ensuring you have a BDBN in place, but also that you have a valid BDBN.


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References:

[1] Superannuation Industry (Supervision) Act 1993 (Cth) s 59(1A). [2] Melissa Fyfe, ‘Magistrate who had a relationship with young clerk wins her super benefit’, The Age (online 21 June 2021) https://www.theage.com.au/national/victoria/magistrate-who-had-relationship-with-young-court-clerk-wins-her-super-benefit-20210616-p581hg.html [3]. Ibid.