The most important estate planning tool is a binding death benefit nomination (BDBN), not the will, according to Townsends Business and Corporate Lawyers.
Townsends’ special counsel for estate planning and superannuation, Brian Hor, said as wealth in superannuation and self-managed super funds (SMSFs) is held in one or more separate legal entities, you do not personally own the wealth.
“The trustee of the fund has the discretion over the payment of benefits from your super fund,” Hor said.
“In many cases, your super instructions will override your will, and your will cannot deal with your SMSF interest unless the trustee of the fund, in its discretion, decides to pay the superannuation interest to your deceased estate.”
Hor said although many public super funds permit a member to make a death benefit nomination it must be binding to provide certainty, and ideally should be non-lapsing.
“A BDBN is especially useful in the context of a SMSF, because what might be achieved through the use of a BDBN for estate planning purposes is limited only by the trust deed for the fund,” he said.
“It may be possible to create a BDBN that can implement special and creative strategies for SMSFs, such as creating a life estate over the superannuation interest in favour of your spouse, or providing for contingencies.”
