Attorney’s power to make a binding death benefit nomination clarified by the Court
7 September, 2020Dispute Resolution, Insolvency and LitigationEstate Planning, Estate Administration and Disputes, Trusts and SuperannuationNews & Updatesuncategorized
The recent case of Re SB; Ex Parte AC  QSC 139, confirms that the decision to make a binding death benefit nomination is a financial matter and can be made for a person by their administrator (or attorney), reinforcing the decision in Re Narumon  2 Qd R 247 where the Court found that the member’s attorney appointed under an enduring power of attorney could make a binding death benefit nomination on behalf of a member who had lost capacity.
This case highlights the importance of having a properly structured estate plan, including enduring powers of attorney and SMSF trust deeds, to ensure your attorneys have only powers you intend them to have so they cannot use these powers to defeat the principal’s intentions.
Estate plans, enduring powers of attorney and SMSF trust deeds should be reviewed to ensure:
(a) the enduring power of attorney allows attorneys to renew, extend or make binding nominations on behalf of a member only where appropriate;
(b) attorneys are not given inappropriate powers that may allow them to make a nomination inconsistent with the member’s estate planning wishes.
Re: SB; Ex Parte AC concerned an adult (SB) who was paralysed after a motor vehicle accident. SB could not manage her financial matters and one of her sons was appointed as administrator for financial matters (not including the damages settlement from the accident).
Approximately $6.75 million of the damages settlement was invested into a Superannuation Fund for SB. The trust deed for the Superannuation Fund provided that, on the death of SB, the trustee was to pay the superannuation death benefit:
(a) to the persons specified in a non-lapsing nomination (a binding death benefit nomination); or
(b) if there was no non-lapsing nomination, to one or more of the member’s dependants and legal personal representative as determined by the trustee using their discretion.
The Court had to decide whether the son, as administrator, had power to make a binding death benefit nomination directing the trustee to pay the death benefit to the estate.
An administrator can deal with any financial matter, but cannot make or revoke a Will or undertake a testamentary act. The Court considered whether making a binding death benefit nomination was a testamentary act or a financial matter.
The Court held that the execution of a binding nomination was a financial matter and the administrator could make a binding death benefit nomination in favour of the legal personal representatives of SB’s estate.
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Please note that this article has been prepared by Margaret Miller, partner of Bell Legal Group, for information purposes only. It is not legal advice nor should it be relied upon as such.