SMSFs: Binding & Non-Binding Death Benefit Nominations

SMSF binding non-binding death benefit nominationBinding  and Non-Binding Death Benefit Nominations form an important part of incorporating superannuation into estate planning, given that a superannuation balance will not automatically form part of a persons estate to be distributed according to their will. However, due to the way nominations are written into the SIS Act and Regulations it is more complicated for SMSFs than APRA funds, though arguably more flexible.

Binding Death Benefit Nomination

A Binding Death Benefit Nomination (BDBN) compels the trustee of the fund to pay a superannuation balance to a nominated person, provided the nomination is valid.

Non-Binding Death Benefit Nomination

A Non-Binding Death Benefit Nomination (NBDBN) is an indication to the trustee of the fund of how the member would prefer the balance is paid. BDBNs provide a higher level of certainty of how the superannuation will be split and can reduce the likelihood of disputes, where as NDBDNs are more flexible – allowing the trustee to take account of facts at the time, including taxation.

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