Three things you need to know about binding nominations

Three things you need to know about binding nominations

When it comes to the distribution of superannuation benefits after your death, a binding nomination is one of the best options – as long as proper measures are in place. Ballantyne Law Group’s Gold Coast estate planning lawyers can help you with this important process.

1- What is a binding nomination and why would I need one?

More people are opting to use their superannuation funds to hold and build personal wealth.
Understandably so, because there are significant taxation and other benefits to do so.

However, did you know that under the law, super is not necessarily part of your estate once you
die? This can have a major impact on the distribution of your super benefits. It is also why you
should consider making a binding nomination.

A binding nomination compels your trustee to follow your directions as to the beneficiaries of your
super benefits after your passing. That is preferable to a non-binding nomination, which means
the trustee knows your wishes, yet need not respect them.

It is important to note that binding nominations are not like a will. You cannot just "set and
forget". In Australia, binding nominations are valid for three years.

Ballantyne Law Group’s estate planning lawyers on the Gold Coast can help you with every step of
the binding nomination process, and we will keep you up to date on its validity.

2- Who can receive my binding nomination?

Superannuation law is complex and there are rules as to who can receive your super benefits
under a binding nomination. It all depends on dependency, which means:

(i) Your spouse, including same-sex and de facto partners;
(ii) Your child or children, including adopted children and stepchildren;
(iii) Someone who at the time of your death was receiving regular financial support from you and
can be regarded as a financial dependant;

(iv) An interdependent person, usually defined as someone with whom you were in a close
personal relationship, co-habited, and/or shared financial and domestic support and care.
Again, the estate planning team at Ballantyne Law Group on the Gold Coast can assist with legal
advice and representation on your preferred beneficiaries and the ongoing validity of your binding
nomination.

3- Is a beneficiary the same as a dependant?

No. And here’s a case study to explain why.

A Victorian case dating back to 2019 demonstrates the complexity around superannuation law. It
concerns a then 68-year-old man recently engaged to a woman 45 years his junior. After her tragic
death in a car accident, the man was awarded his late fiancee’s superannuation death benefit of
$180,000. This was despite the woman’s mother being her nominated beneficiary.

How did this happen? Under the Superannuation Industry Act, authorities found that the mother
did not meet the legal criteria of a dependant. Instead, the man was found to have been in an
interdependent relationship with the woman before her death and was therefore entitled to her
super benefit.

The case gained much publicity, not least because the man was a financially secure, highly paid
professional on the verge of a healthy retirement pension. However, regardless of his position and
financial situation, the law makes it clear that any chosen beneficiary of your super benefits must
fit within the legal definition of dependency.

While such cases give rise to calls for policy changes and legal reforms, most importantly they
affirm the need to be as diligent as possible with your estate planning, including the making of
valid binding nominations around your superannuation benefits.

If you would like to discuss binding nominations, our Gold Coast estate planning team is here for
you. Please contact Ballantyne Law Group on (07) 5606 7332