Binding death benefit nominations provide certainty for people establishing their superannuation and estate plans. They help ensure that upon the member’s death, any super benefits are paid according to the member’s wishes, and are not left to the trustee’s discretion.

The recent Federal Court decision in the Mandie case1 demonstrates that if there is no binding death benefit nomination, then the only condition is that the trustee’s decision to pay the benefits is fair and reasonable. The trustee will have the unfettered discretion to pay the benefits as it deems appropriate. This means that the trustee:

  • is only bound by the superannuation fund trust deed
  • is not bound by any supplementary direction whether it be the deceased’s will or a settlement agreement.


The case involved an appeal to the Federal Court from the Superannuation Complaints Tribunal (SCT) regarding the payment of death benefits from a super fund. The SCT hears complaints in relation to public super funds (not SMSFs), but the rules regarding binding death benefit nominations work in the same way.

The court held that in the absence of a binding death benefit nomination, the trustee was under no obligation to consider Mandie’s will or any other agreement. The trustee of the superannuation fund was bound only by superannuation law and the trust deed.

Binding death benefit nominations

A binding death benefit nomination is a written direction to the fund’s trustee detailing how, on the member’s death, the relevant death benefits are to be paid, whether to dependants or the legal personal representative.

If the binding death benefit nomination is valid and in effect at the time of the member’s death, then the trustee must comply with the binding nomination and pay the benefit to the nominated beneficiaries.2

A valid binding death benefit nomination generally remains in effect for three years from the date it is first signed, last amended or confirmed.

The facts of the case


Mandie died in 2011 and was survived by his three adult children: two sons and a daughter. According to super law and his fund’s trust deed, each child was a ‘dependant’.

When Mandie died, he had in place:

  • a life insurance policy in his superannuation fund which provided for the payment of benefits to his nominated beneficiaries
  • a will for his estate under which his daughter, Evelyn, was one of the executors.

The super fund made provision for a binding death benefit nomination, however Mandie had not made such a nomination.

In 1995, Mandie and his sons had entered into a formal settlement agreement and payout to resolve a dispute between them in relation to the contributions of each to the family business. The settlement agreement limited his sons from receiving any future entitlements from his estate by terms that stated that neither of Mr Mandie’s adult sons “have any further rights against [him] or [his wife] or their respective estates…” The settlement agreement also provided for fixed sums to be paid under his will to his grandchildren and the residue of his estate to be paid to his daughter.

Before Mandie passed away, he was a member of the BRW Rich 200 list and his wealth in May 2011 was estimated at $289 million.3


In Mandie’s superannuation policy, he had nominated his spouse as his beneficiary, however she had predeceased him. He had made no other nominations.

Rule 11.10 of Mandie’s fund trust deed permitted the trustee in the absence of a binding death benefit nomination to pay the death benefit in the following way:

“… the Trustee must pay or apply a Member’s Death Benefit to or for the benefit of such one or more, as determined by the Trustee, of:

  1. the Dependants of the deceased Member;
  2. the Legal Personal Representative of the deceased Member; …”

The trustee resolved to equally divide Mandie’s death benefit between his three surviving dependants, being his two sons and his daughter.

The dispute

As an executor of his estate, Evelyn applied to the SCT to challenge the trustee’s decision.

She challenged the trustee’s decision, arguing that:

  • the earlier settlement agreement between Mandie and his sons expressly limited the sons from deriving any benefit from Mandie’s estate
  • in the absence of a binding death benefit nomination, the death benefits should be paid to her father’s estate (in effect, to her as the father’s legal personal representative).

It was argued that although the settlement agreement did not specifically deal with his superannuation, Mandie’s wish was to exclude his sons from any interest in his or his wife’s estate and this was clear from the settlement agreement. Mandie’s daughter argued it was implied by the settlement agreement that her brothers should not receive a benefit from the superannuation policy.

However, the trustee maintained that usual practice when no binding death benefit nomination is made, is to:

  • first, pay the death benefit to the member’s dependants as a priority
  • secondly, if there are no dependants, then pay the death benefits to the member’s legal personal representative.

The outcome

The SCT found in the trustee’s favour. The SCT in handing down its decision, held that the trustee had discretion to make the payment and the decision need only to be made on grounds that were fair and reasonable in the circumstances. The SCT noted that:

  • superannuation is not an asset of the estate and the trustee is not bound to follow the directions of a will, even if superannuation is specifically mentioned in the will
  • although the trustee will look to a deceased member’s will and any other document which purports to identify the wishes of a deceased member to assist in determining the wishes of the member, the role of the trustee in the distribution of a death benefit is not to resolve any perceived or real issues in a deceased member’s estate
  • the trustee must decide the distribution of a death benefit unless a binding death benefit nomination was in force, which in Mandie’s case, there was not
  • in general, a trustee only pays the death benefits to the legal personal representative if there are no dependants or if there was such a direction in a binding death benefit nomination
  • while Mandie may have been of an age where he could have received the benefit directly, the benefit remained in the superannuation system at the time of his death and subject to a decision of the trustee.

The SCT concluded that since there was no evidence to support a greater claim on the benefit by any of the adult children it was fair for the trustee to decide to pay the benefit, in equal shares, to Mandie’s adult children as non-financial dependants.

On appeal to the Federal Court, the SCT’s decision was affirmed, therefore the executors were unsuccessful in their challenge.

What does the case mean for estate planning and superannuation?

The significance of this case was well stated by the SCT:

Firstly, superannuation is not an asset of the estate and a trustee is not bound to follow the directions of a will. Even if superannuation is specifically mentioned in a will, it does not make it an asset subject to the terms of the will.”

The Mandie case highlights that as superannuation is not an asset of an estate, if someone wants to direct the specific payment of superannuation benefits, then they must have in place a binding death benefit nomination or a death benefit agreement.

For those who are planning their estates and superannuation, it is critical to make appropriate death benefit arrangements in order to ensure the wishes of the member are fulfilled.