Mr & Mrs Katz were long term members and also acted as individual trustees of their self managed superannuation fund.
Mrs Katz died leaving Mr Katz as the sole member and trustee of the fund. Superannuation laws required the fund to have two individual trustees. Mr Katz appointed his daughter, Linda Grossman, as an additional trustee of the fund and completed a non-binding death benefit nomination stating he wanted his death benefit to be paid equally between his daughter Linda and his son Daniel Katz.
One month prior to Mr Katz death, Linda applied to become a member of the fund and used her position as trustee to accept herself as a member of the fund. Following the death Linda as surviving trustee appointed her husband as a trustee of the fund and subsequently paid the entire death benefit to herself.
Daniel took the decision to court, lost the case, and received no benefit from the fund. The trustees would have been bound to honour Mr Katz’ intentions if he had completed a binding death benefit nomination.
Benefits of a Binding Death Benefit Nomination
In the same way a Will allows you to direct who gets your estate, the benefit of a valid binding nomination is that you direct who benefits from your superannuation. For example you could direct it to your estate so that it is dealt with under the provisions of your Will, or to a named beneficiary.
Like your Will a binding death benefit nomination should be kept up to date so that it reflects your current circumstances. However unlike a Will a binding nomination provided to a super fund generally lapses after 3 years.