In the recent case of Munro & Anor v Munro & Anor heard in the Supreme Court of Queensland on 25 March, 2015, the Court held that what in substance appeared to be a binding death benefit nomination was actually not binding because it used the words, “Trustee of Deceased Estate” instead of “Legal Personal Representative.”
Mr Munro had signed what he most likely believed to be a binding death benefit nomination seemingly with the intention of his death benefit to be paid to his estate on his death.
The trust deed and legislation required (amongst other things) a valid nomination to specify for a death benefit to be paid to one or more of the person’s dependants (as defined in the legislation) or their legal personal representative.
The Court held that, “Trustee of Deceased Estate” was not necessarily the same as the “legal personal representative” or “executor”. Therefore, the Court decided that the nomination was not binding. Mr Munro’s wife, Mrs Munro, who was now the sole trustee of the superannuation fund could therefore decide to pay the entire death benefit to herself rather than to the estate, which meant that less would end up going to Mr Munro’s children.
This case highlights the importance of being very precise when preparing a binding death benefit nomination and the need to read the deed carefully and be familiar with the legislation. Otherwise, if something is overlooked, then, as shown in this case, the nomination may not be binding, which could have detrimental consequences for the deceased’s intended beneficiaries.
An advisor who prepares a binding death benefit nomination which is ineffective could be liable to a disappointed beneficiary who would have received the money if the nomination was not defective.
It is important that new binding death benefit nominations are drafted properly, and it is also important for your clients to have their current “binding nominations” reviewed to ensure that they really do tick all the boxes.