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Home | Blog | Attorney allowed to renew Binding Death Benefit Nomination

In the recent Queensland Supreme Court decision of Re Narumon Pty Ltd [2018] QSC 185 Justice Bowskill considered whether an Attorney pursuant to an Enduring Power of Attorney can renew or make a Binding Death Benefit Nomination (BDBN). Justice Boswkill answered in the affirmative.

The facts:

Mr Giles had a self-managed superannuation fund (SMSF), the John Giles Superannuation Fund. Unfortunately Mr Giles lost his capacity to manage his own affairs before he died. Mr Giles had an Enduring Power of Attorney which appointed both his wife and sister as his Attorneys. Mr Giles’ Enduring Power of Attorney did not authorise the Attorneys to enter into a conflict transaction of any kind or type.

Narumon Pty Ltd was the trustee of the SMSF. Mr Giles’ wife and sister were both directors of Narumon Pty Ltd, until June 2018 when his sister resigned.

At the time of Mr Giles’ death he had entitlements of an accumulation account of approximately $1 million and a lifetime complying pension of approximately $3 million.

On 5 June 2013 Mr Giles made a Binding Death Benefit Nomination directing the trustee to pay as follows:

  • 47% to Mrs Giles, his spouse;
  • 47.5% to Nicholas, his son; and
  • 5% to Mrs Keenan, his sister.

The nomination lapsed three (3) years after it was signed.

Therefore, on 16 March 2016, Mrs Giles and Mr Giles’ sister as Attorneys for Mr Giles executed an Extension of Binding Death Benefit Nomination document to confirm and extend the Binding Nomination Mr Giles made earlier on 5 June 2013.

At the same time, Mrs Giles and Mr Giles’ sister again as Attorney for Mr Giles signed a new Binding Death Benefit Nomination directing the trustee to pay as follows:

  • 50% to Mrs Giles, his spouse; and
  • 50% to Nicholas, his son.

Mr Giles’ sister was not included as she was not a dependant and therefore not eligible to receive a benefit from the Death Benefit on Mr Giles’ death.

The application to the Supreme Court

An application was made to the Court to determine, amongst other things, whether it is within the scope of a power of Attorney of a member of a Self-managed Superannuation Fund to do either of the following:

  1. To execute a document extending the Binding Death Benefit Nomination made personally by the member; and
  2. To make a completely new Binding Nomination on behalf of the member.

Justice Bowskill considered the following:

  1. The Superannuation Industry Supervision Act and regulations;
  2. The trust deed itself;
  3. The Powers of Attorney Act;
  4. Whether the making of a Binding Nomination is an act that is one that must be performed personally?
  5. Public Policy considerations discussed in the Australian Law Reform Commissions’ Report; and
  6. The requirement in the Powers of Attorney Act 1998 (QLD) to avoid a conflict transaction.

The decision:

  1. Her honour noted that there is no restriction in the Superannuation Industry (Supervision) Act or Regulations which prevent an Enduring Power of Attorney from executing a nomination on behalf of the member.
  2. The Trust Deed which governed the Self-managed Superannuation Fund had provisions which expressly authorised an Attorney under an Enduring Power of Attorney to exercise any power or right given to a member under the Deed if the member did not have legal capacity.
  3. Justice Bowskill determined that the act of binding the trustee of a Superannuation Fund to pay benefits following the member’s death to a nominated person is a financial decision.
  4. Justice Bowskill confirmed that the making of a binding death benefit nomination is not a testamentary act, therefore, unlike a Will,  it can be delegated to an Attorney.
  5. In considering Public Policy considerations discussed in the Australian Law Reform Commission’s report in relation to elder abuse, her honour noted the following:
  • There are a number of protective features within the Power of Attorney Act;
  • In this case there was the added protection of the principal having appointed two attorneys and requiring them to act jointly.
  1. As Mr Giles’ Enduring Power of Attorney did not authorise the attorneys to enter into a conflict transaction, Justice Bowskill considered whether by signing the documents the Attorneys had entered into a conflict transaction within the meaning of section 73(2) of the Powers of Attorney Act 1998 (Qld). Justice Boswkill held that at least insofar as the extension document was concerned there was no conflict but rather an alignment of interests in this case.

In the 2016 extension, the Attorneys did no more than confirm the nomination made by Mr Giles himself and notwithstanding that it conferred a benefit on one of the Attorneys, she was satisfied it was not a conflict transaction. Therefore it did not matter that the Power of Attorney did not specifically authorise conflict transactions.

Her honour noted that there is a distinction between the making of a nomination and the renewal of a Binding Nomination. The making of a binding nomination could be considered a conflict transaction.

Therefore the question of whether the changing or making of a new nomination by an Attorney pursuant to an Enduring Power of Attorney which benefits the Attorney, but does not express authority conflict transactions, would be a conflict transaction and render the nomination invalid.

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