Binding Death Benefit Nominations (BDBN)
A Binding Death Benefit Nomination or BDBN (sometimes also called a Binding Nomination) is a special form that you complete with your relevant Superannuation Fund. The nomination specifies who you want to leave your Superannuation to if you were to pass away.
Where it gets complicated
If you have an online account with your Superannuation, which most of us do, you can login and specify your beneficiaries. However, this is not a binding nomination but rather just your preference and it is a direction that your Superannuation Fund does not have to follow if you were to pass away. In contrast, if you set up a BDBN then your Superannuation Fund does have to follow it (as long as it is current).
How do I know if I have a BDBN?
The best way is to check with your Superannuation Fund. If you don’t have one, you should. However, if you have a Will with a Testamentary Trust the beneficiary for your BDBN may need to be your Legal Personal Representative to ensure that the money is able to be distributed as excepted trust income into the future (see our blog article on the new testamentary trust laws). It is best to speak with us to make sure that your BDBN is set up appropriately.
If you do have a BDBN – great! But what you may not realise is that they can lapse. The difficult thing about this is that there is legislation which provides that BDBN are only valid for three years, meaning that they have to be renewed every three years. However, each Superannuation Fund makes their own rules – with some funds they lapse every two years and some funds allow you to make non-lapsing nominations (but where you don’t specify this they generally default to lapsing nominations). This can get confusing – so it is best to speak with us and with your Superannuation Fund to ensure that you have all of your bases covered.
Why would I get a BDBN?
Unlike your preference that you may put in your online profile, a BDBN is binding on the Superannuation Fund. This means that you can control who gets your Superannuation, which for many Australians can be one of your biggest assets when you pass away. You may also have life insurance attached to your Superannuation and this can also be hundreds of thousands of dollars. Where you have a Testamentary Trust Will, a BDBN is also particularly important (as we have mentioned above). In some States and Territories, a BDBN means that your Superannuation does not form part of your estate and therefore cannot be contested. This can be a powerful tool where your Superannuation is one of your valuable assets and you therefore have control over who receives this benefit after you are gone.
How your BDBN should be set up and its effect will depend on your unique circumstances, the State or Territory you live in and also which Superannuation Fund you belong to – so there is no substitute for seeking legal advice from a succession law expert.
We offer no cost, no obligation initial appointments so that you can find out where you stand and exactly how much it will cost you to get your Will and/or Estate Plan sorted. We offer fixed fees and payment plans - your wishes, your way.
Don't wait until it's too late, contact us today!
Phone 1800 22 33 90
Or request a free call back on our website