Whether you are contributing to a Self-Managed Super Fund (SMSF) or an Industry Super Fund, it is essential that your Binding Death Benefit Nomination (“binding nomination”) be valid!
You, as the nominator, would always want your binding nomination to be effective so that those who you nominate will, in fact, receive your superannuation benefits. The formal requirements for a valid binding nomination are strict and include a provision that the beneficiaries must be a ‘dependent’ and/or be your legal personal representative (i.e. the deceased’s estate).
A ‘dependent’, for superannuation purposes, may include your spouse, your children, any person with whom you have an interdependent relationship (i.e. a close personal relationship, rather than a mere friend) or any person who is otherwise “financially dependent” upon you.
In order for your binding nomination to be valid it must be made out in writing addressed to the Trustee of the fund, be signed by you in the presence of two witnesses over 18 years of age (who are not beneficiaries) and a signed witness declaration. Once all of these documents are received by the Trustee then the binding nomination will have become valid, subject to mistakes made by the nominator. If any of these steps are not followed then the binding nomination will fail.
You may have to renew your nomination every 3 years in order for it to be valid. You can change update or revoke your nomination at any time.
To complete a Binding Death Benefit Nomination your industry super fund will inevitably have a form which you will need to fill out.
Should the binding nomination fail, the Trustee of the fund, may then decide to pay your superannuation benefits to any other possible dependent (whether you intended that that person receive a benefit or not!).
Should you have no known dependents, then the Trustee may pay out your superannuation benefits to any other person it determines to be appropriate, and that could be a former partner, or even a child of a former partner!
A Non-Binding Death Benefit Nomination it will only be an indicator to the Trustee of whom you may want your benefits to be made. It is NOT binding on the Trustee to pay that person any benefit at all – it is at the Trustee’s discretion.