What is a binding death benefit nomination and why do I need one?

It is a common misconception that a person’s Will covers their super benefits. If you want to direct your super to someone after you die, you need a binding death benefit nomination (BDBN) that accords with your super fund’s governing rules and superannuation law. 

A BDBN is a legal document that you sign and give to your super fund. It tells the trustee of your super fund to which beneficiaries they should pay out your superannuation should you die.

If you don’t make a BDBN, then the super fund trustee has unfettered discretion to determine where your death benefits are to be distributed. 

A valid BDBN is binding on a superannuation fund trustee.  However, it is only valid for three years from the date that it is signed by the superannuation fund member, otherwise it is becomes only of persuasive value. It can be updated at any time by completing a new BDBN.  The exception to the three-year rule is self managed super funds (SMSFs). With SMSFs, a BDBN can apply indefinitely if the SMSF trust deed allows for it. However, many SMSF trust deeds require that nominations are renewed every three years anyway.

If a BDBN expires before you die, the super fund trustee is not required to have regard to the terms of the nomination in determining how to distribute any your superannuation funds.

The people who can be nominated as beneficiaries in a BDBN are limited to:

  • your current spouse
  • your children
  • the executor of your Will); and/or
  • any person in an interdependent relationship with you, being a person who is in a close personal relationship with you, lives with you and one or each of you provides the other with financial support, domestic support or personal care.

Our Peace of Mind package includes a BDBN, as well as a Will, Enduring Power of Attorney (Medical) and Enduring Power of Attorney (Financial).  Find out more here.