van Camp - Have the BDBN signed early - the certainty is better than not ha

In van Camp v Bellahealth Pty Ltd [2024] NSWSC 7 of the NSW Supreme Court, a binding death benefit nomination (BDBN) signed on the date of death of the sole member of a self managed superannuation fund (SMSF) was upheld. Challenges to the BDBN’s validity, by the SMSF trustee and two of the deceased’s executors, based on lack of capacity and unconscionability both failed.

The SMSF member on his death bed was signing a BDBN he had been advised about by his tax adviser many years before. The BDBN was to benefit his wife and a primary consideration was the tax saving for her in obtaining the funds from his superannuation in this way.

However having the BDBN signed earlier while there was no question as to the member's capacity (which would generally be an issue where the member is in hospital on medication) would have potentially avoided having to go to court to uphold the BDBN, which was questioned by the trustee.

Where a low doc BDBN is offered as part of the SMSF package this can be signed earlier and overridden by a traditional BDBN later if the SMSF trust deed allows.

Alternatively if the member has passed age 65 or is retired they could withdraw their super tax free to be given to their spouse or children while the member is alive.

Hill v Zuda was mentioned in the Judgment to refute a claim that the BDBN was invalid for not complying with regulation 6.17A(3) of the Superannuation Industry (Supervision) Regulations 1994 (requiring the trustee of the SMSF to give reasonable information for the member to understand the BDBN).