It Depends – What did the High Court decide about binding death benefit nominations in SMSFs in Hill v Zuda?

In this edition of ‘It depends’, partner Scott Hay-Bartlem talks about the recent Hill v Zuda High Court decision on binding death benefit nominations in self-managed superannuation funds.

VIDEO TRANSCRIPT

Welcome to this ‘It depends’ where I’m talking about what the High Court decided about binding death benefit nominations in self-managed superannuation funds in the recent case of Hill v Zuda.

The Background

So, Zuda Pty Ltd was the trustee of The Holly Superannuation Fund which was a self-managed superannuation fund. One of the members died and his daughter challenged his binding death benefit nomination on the basis it did not comply with the specific rules for binding death benefit nominations in the superannuation rules.

The Decision

The High Court decided that the provisions of the superannuation laws that apply to binding death benefit nominations do not apply in self-managed superannuation funds.

What does that mean?

Okay, so this means that when we’re doing binding death benefit nominations in self-managed superannuation funds, it all comes down to the trust deed. So, you’ll have to, say with me. Read the deed, read the deed, read the deed. The specific provisions in the superannuation laws about three-year lapsing’s and two witnesses are not relevant to SMSFs unless of course your trust deed says so. And it comes back to looking at your deed and following it precisely.

So, binding death benefit nominations are all okay for self managed super funds then?

Well, this is our “it depends”. So, the High Court challenge on this particular issue has been sorted out, but there are many, many, many other issues, and many other ways we see binding benefit nominations being challenged. So, does it follow the deed, have we worded it properly? Does it have the result that we want? Does it work in with the overall estate plan? We still see many disputes about binding death benefit nominations. It’s not all okay yet.

Now, join Clinton Jackson and I on the 3rd of June at: pm. We’ll to do a webinar. We’ll talk about all this in far more detail. Thanks for watching this It depends.