Clarification of law regarding BDBNs

Binding Death Benefit Nominations

In reflecting on 2020, we have been looking at how certain aspects of the law have been clarified and considering the impacts these clarifications have when advising clients.

One case stands out, as it determined whether a financial Attorney has the power to make a Binding Death Benefit Nomination (BDBN) on behalf of their Principal (the person appointing the Attorney). As Super is often the largest component of a person’s assets when they pass away, the conclusion reached in this case is significant.

The Case

In the case (Re SB; Ex parte AC [2020] QSC 139, if you’d like to read the judgement in full), a woman was paralysed after a motor vehicle accident and could not manage her financial affairs. Subsequently, one of her sons was appointed as her Administrator for financial matters (an Administrator is appointed by the Courts when someone has not appointed a financial Attorney. They have similar if not the same powers as financial Attorneys). The woman received about $6.75 million in damages as a result of the accident, which was invested into her Superannuation Fund.

The question that the Court considered was whether the woman’s son, as her Administrator, could make a BDBN.

Here the Court found that making a BDBN was a financial matter and not a testamentary act (such as making a Will). Therefore, as financial Administrator, the son had the authority to do anything the Principal could in relation to a financial matter and was able to create a BDBN.

This judgement has confirmed the position in Queensland only, with it giving guidance to the other States and Territories but no firm position has been reached.

What’s the Takeaway?

As the Courts have decided that making a Binding Death Benefit Nomination is a financial matter, this means that Administrators and financial Attorneys appointed under an Enduring Power of Attorney have the authority to make, withdraw or amend an existing BDBN.

Generally, Enduring Powers of Attorney are put in place with the intent of giving the financial Attorney unlimited powers. With the clear understanding of how far a financial Attorney’s authority now reaches, clients may wish their Attorney’s authority to be limited. When speaking with clients about who to appoint as their financial Attorney it’s important that they understand the types of decisions their financial Attorney can make. We often give examples around people’s significant assets – for example, an Attorney can sell your home – now it is important to include that an Attorney can deal with another significant asset, your Superannuation.

If you’d like any assistance with your personal or Estate Planning, or in having these conversations with your clients, our Private Clients Team is here to help.

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