What is a BDBN (Binding Death Benefit Nomination) for an SMSF?

What is a BDBN (Binding Death Benefit Nomination)?

When you die, your super must be paid out to someone. For most people, this would be paid to your spouse, children or estate (see our article here for more information).

While they can only pay your super to one of these "allowed" beneficiaries, the trustee of your fund is responsible for deciding who gets your super when you die. Even if your Will says that your super is to go to a particular beneficiary, that will only be relevant if the trustee of your fund pays the benefit to your estate.

A BDBN is a special document that allows you to dictate exactly how your super is to be dealt with when you die. In other words, it takes away the discretion trustees normally have to make the decision.

Why a BDBN is important

People often use binding death benefit notices or reversionary pensions when they want to be absolutely sure that the trustee will pay their super in accordance with their instructions when they die. It is quite common to have these things in public super funds where the trustee is a complete stranger.

They are less common in SMSFs because the remaining trustee (who will make all the decisions about your super when you die) is often your spouse or the executor of your estate. SMSF members are sometimes quite comfortable leaving these people with the flexibility to deal with the death benefit in whatever way is most beneficial for the family at the time.

Binding death benefits are often used when the member wants to make sure their super will be paid to their estate when they die – so that it will fall under their Will.

If you put a binding death benefit notice in place, remember, it is a very powerful document. It is effectively a Will for your superannuation which is one of your largest financial assets. Even if your super balance isn't very large yet, remember that it will include any life insurance that is paid when you die.

How Heffron can help you with your BDBN

We recommend getting professional advice before putting a binding death benefit nomination in place and we would be happy to refer you to a qualified estate planning lawyer.

If we look after your SMSF and you have already decided how you want your binding death benefit notice to be structured, we can provide you with a suitable notice if your fund is using the latest version of our trust deed.

Death Benefit Nominations – Binding and Non-Binding

Heffron provides death benefit nomination templates for all clients on the most recent version of the Heffron trust deed. To request a template, please contact clientsupport@heffron.com.au

For funds not on the latest deed, we cannot provide a template. You will need to either arrange one with your own lawyer or update your trust deed to our latest rules.

You may also be interested in...

• Superannuation Beneficiary Rules: Who gets your super when you die?

This article is for general information only. It does not constitute financial product advice and has been prepared without taking into account any individual's personal objectives, situation or needs. It is not intended to be a complete summary of the issues and should not be relied upon without seeking advice specific to your circumstances.