Attorney can make a superannuation binding nomination on behalf of a member – confirmed by the Supreme Court of Queensland

24 August 2018 Topics: Estate administration and disputes, Estate planning, Superannuation, Trusts

In Re Narumon [2018] QSC 185, the Supreme Court of Queensland has confirmed that an attorney has the power to make, renew or extend a superannuation binding nomination on behalf of a member.

For the background to the case, refer to our recent publication.

The decision will have a significant impact in the approach to an estate plan, binding nominations, the appointment of attorneys, and restrictions and powers in enduring power of attorney documents.

The member’s binding nominations

The member made a BDBN in 2013, which was to lapse after three years. Shortly after making the BDBN, the member lost capacity. Before the BDBN lapsed in 2016, the member’s attorneys signed two documents:

  • a new BDBN; and
  • a letter to the trustee of the fund confirming an extension of the 2013 BDBN.

The extension of the 2013 BDBN confirmed the terms of the original 2013 BDBN, which had nominated 5% of the death benefit be paid to a person who was not the member’s dependent or legal personal representative.

To avoid the potential of the 2013 BDBN and extension being invalid due to the nomination of a non dependent, the new BDBN signed by the attorneys changed the nomination to split the 5% between the remaining dependents nominated in the original 2013 BDBN.

Were the binding nominations valid?

First, the Court confirmed the original BDBN made by the member in 2013 was a valid nomination, despite the 5% nomination to a non-dependent.

  • The Court agreed with the decision of Mullins J in Munro v Munro (2015) 306 FLR 93, that regulation 6.17A of the SIS Regulations does not apply to self-managed superannuation funds and confirmed that it is the trust deed alone that governs the form under which a BDBN can be given in an SMSF.
  • The Court accepted our submission that 5% nomination to the non-dependant does not affect the validity of the nomination as a whole. Applying a ‘practical and purposive’ approach, the Court held that the original 2013 nomination was of no effect only to the extent of the 5% nomination to a non-dependent.

Second, the Court held that an attorney has the power to make a BDBN on behalf of a member.

  • The Court determined that there is no restriction within the superannuation legislation prohibiting an attorney from making a BDBN on behalf of a member and, in this case, the terms of the deed specifically allowed it.
  • However, it was also necessary to determine whether this was within the attorneys’ powers under the relevant law governing enduring powers of attorney as there was no existing legal authority.

The Court found that the making of a BDBN is a matter relating to the member’s financial matters (over which an attorney can exercise power), and that it is not an act that must be performed personally (agreeing that the making of a BDBN is not a testamentary act). Therefore, it is a financial matter that can be delegated to an attorney.

Third, the Court had to consider whether the extension of the BDBN or the new BDBN made by the attorneys was a conflict transaction (as one of the attorneys or their family members benefited from the nomination).

  • In this respect, the Court agreed that the reason for making the extension of the original BDBN was ensure the member’s estate planning wishes were carried out so the attorneys’ interests coincided with the member’s, rather than conflicted.
  • However, in determining whether the making of the new BDBN (which reallocated the 5% invalid nomination), the Court did not accept that this was not a conflict of interest and, in the absence of the member’s enduring power of attorney document allowing such a conflict, the new BDBN could not be valid.

Take care with EPOAs and BDBNs

The decision provides clarity on the important issue of whether an attorney can make, renew or extend a BDBN on behalf of a member.

Existing estate plans, in particular enduring powers of attorney and BDBNs, will need to be reviewed to ensure:

  • enduring power of attorney documents allow attorneys to renew, extend or make binding nominations on behalf of a member where appropriate; and
  • attorneys are not given inappropriately broad powers that potentially allow them to make a nomination that is inconsistent with the member’s estate planning wishes (we see many enduring powers of attorney where all conflicts are authorised).

Advice on the appointment of an attorney and on whether to include (and the drafting of) conflict clauses will now need to be considered with extreme caution in light of today’s decision.

Attorneys seeking to make, renew or extend a BDBN on behalf of a member will need to exercise that power with care having regard to the member’s wishes, the terms of the SMSF trust deed and the terms of the enduring power of attorney.

Access the judgement here.



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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.