Blended Families & Superannuation: Getting your BDBN right

Getting your BDBN right

Superannuation is often one of the most significant assets a person holds at the time of their death, and it doesn’t automatically form part of their estate. This makes it an incredibly useful tool in succession planning, particularly for blended families, where financial provision for both a current spouse and children from earlier relationships must be carefully balanced. 

A Binding Death Benefit Nomination (BDBN) allows you to direct your superannuation to specific beneficiaries. But unless executed properly, and in strict compliance with both legislation and the terms of your superannuation fund’s trust deed, it can be declared invalid. 

What Makes a BDBN Legally Binding? 

Under the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and SIS Regulations (SISR), a BDBN must meet several formal requirements: 

  1. It must be in writing. 
  2. It must be signed and dated by the member. 
  3. It must be witnessed by two adults who are not nominated beneficiaries. 
  4. It must clearly specify beneficiaries who are either: 
    • Dependants (as defined in SIS legislation); or 
    • The legal personal representative (i.e., the executor or administrator of the estate).
  5. It must be valid under the governing rules of the super fund found in the trust deed, these may impose additional requirements (e.g., written notice to all trustees). 

If any of these steps are missed, the nomination may be non-binding or invalid, and the fund’s trustee may decide who receives the death benefit—often leading to disputes, especially in blended family situations. 

We can help ensure your BDBN is compliant and your wishes are respected. Call us on 1300 654 590 or email us at wehelp@adlvlaw.com.au.

Real Cases: What Can Go Wrong 

 

Williams v Williams [2023] QSC 90 

Anthony Williams executed a BDBN in 2018, directing that 50% of his SMSF benefits be paid to his second wife Gayle and 50% to his estate. However, the trust deed required that written notice of the BDBN be given to all trustees. That didn’t happen, his son Paul, a co-trustee, wasn’t notified. Despite Anthony being a trustee himself, the court held this was insufficient. The nomination was declared invalid. 

Key lesson: Even when the intention is clear, failing to follow the exact rules of the deed can unravel everything. 

 

Munro v Munro [2015] QSC 61 

Barrie Munro named the “Trustee of Deceased Estate” as his beneficiary in a BDBN. But under SIS law, a nomination must be made in favour of a dependent or legal personal representative (LPR). The court found that the term “Trustee of Deceased Estate” did not mean the same thing as LPR. 

Why? The LPR is the executor or administrator responsible for administering the estate i.e., carrying out the directions of the deceased according to their Will until their assets have been distributed.  In contrast, a trustee of the estate is responsible for making decisions regarding the maintenance of the estate while it is being held in trust until it has been legally transferred to the beneficiaries.  For these reasons, the court ruled that Mr. Munro had not properly nominated a valid beneficiary under SIS law. Therefore, the nomination was invalid. 

Key lesson: Use precise legal language, “close enough” is not good enough when it comes to superannuation law. 

 

Why Superannuation is So Useful in Blended Families 

Superannuation can help ensure a second spouse is financially secure without affecting the inheritance of children from a previous relationship. For example, you might: 

  • Direct super to your current spouse via a BDBN; 
  • Leave estate assets (through a Will or Trust) to your children; 
  • Or vice versa, depending on your family and financial goals. 

But none of this works if the BDBN is invalid, or if trustees do not exercise their powers properly. Worse still, these issues often only come to light after death, when relationships are strained, and litigation is more likely. 

 

How We Can Help 

At ADLV Law, we regularly work with blended families to: 

Our team understands that every blended family is unique, and so is every estate plan. 

Don’t leave your legacy to chance. If you’re part of a blended family and want to ensure your superannuation is distributed exactly as you intend, contact us today and call us on 1300 654 590 or email us at wehelp@adlvlaw.com.au. Clear intentions need clear legal execution. Let’s make sure your wishes are protected. 

Our Great Lawyer Guarantee

We want to be part of your team over the long term. We'll achieve this by sticking closely to the following principles:

  • We'll listen carefully to understand what you want to achieve. Then we'll thoroughly explain our advice and step you through the documents. You can be sure you'll know the full consequences.
  • Our lawyers work as a team, so someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.
  • One of our key goals is to pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.
  • We only do what we're good at. You can be confident that we know what we're doing and won't pass on the cost of our learning.
  • For advice and documents, we provide a fixed or capped quote so you don’t take price risk. If you're in a dispute, we'll map out the process and costs so you know what to expect.
  • We're not in this game for our egos. We're in it for a front row seat to witness your success.

We measure our success on how efficiently we have facilitated your objectives, enhanced your relationships, and reduced the level of stress for all involved.

If we sound like people you can work with, call us now and speak directly with a great lawyer.

Advising Under an EPOA: Know Your Duties and Risks

Advising Under an EPOA: Know Your Duties and Risks

As a professional adviser, you may have been instructed to manage personal wealth matters for clients in a way that benefits not only your client but also their families.  Your client, like Mary, may have routinely provided regular financial support to their family – adult children, grandchildren, spouses, or even elderly parents. This support can be informal but deeply entrenched, often continuing for years. 

But what happens when your client loses capacity, and their Enduring Power of Attorney (EPOA) takes effect? 

read more