Document Samples

Binding Death Benefit Nomination (non-lapsing)

One of the key elements of your overall plan in running your SMSF is your estate plan. That is, what happens to your SMSF account balance, and perhaps any insurance proceeds, in the event of your death - and what happens if your spouse unfortunately also passes away at the same time ?

These are just two of many issues to consider when mapping out an estate plan, where your SMSF account balance (plus any insurance proceeds) may form a significant part of your remaining assets. Now the thing is, the payment of death benefits from a SMSF is determined in accordance with the governing rules of the fund and not (as most people think) in accordance with the terms of your will. That is, superannuation benefits are dealt with outside of your will. 

Now you can direct how your SMSF death benefits are to be paid after your death.  This direction is called a “binding death benefit nomination”. 

A binding death benefit nomination is a written direction to the trustee that directs the trustee to pay your SMSF benefits to certain dependents and/or the legal personal representative in the proportions set out therein in the event of your death.  For SMSFs, the nomination is valid until it is altered or revoked (i.e. SMSFs do not need to adhere to the rule of updating it every 3 years).

If the binding death benefit nomination is valid and in effect at the date your death, the trustee must pay your SMSF monies to the beneficiaries nominated in the proportions set out in the nomination.

For more information on the binding death benefit nomination, we recommend that you read the article by Denis Barlin from  SBN lawyers about binding death benefit nominations in the SMSF Technical education & strategies section.

A sample binding death benefit nomination (non-lapsing)

To give you a good idea of what one of these documents look like, we provide a sample BDBN. Note that this is a sample document only, with the purpose of just enabling you to see what one of these documents looks like.

You should seek professional advice on your estate planning needs and the drafting of a binding (or non-binding) death benefit nomination, as there are many factors and variables that can go into these decisions, which in turn determines how your BDBN will be drafted.

Access to our sample BDBN is reserved for members only.

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