Ronald Donovan, before he died, wrote a letter to the trustees of his SMSF, expressing that he wished for the residuary of his member balance to be left to his legal representative as nominated in his will.
The issue was whether this expression of wishes constituted a BDBN. His widow stated that it did not constitute a BDBN as it did not show intention that it would bind the trustee of the Fund and therefore the trustee had discretion to distribute the funds elsewhere. His daughter contended that it did constitute a BDBN given that the SMSF’s deed did not need the nomination to take any particular form.
Clause 11.4 of the Deed stated that,
“a Member may designate a Dependant or legal person representative of the Member,” and that, “a Member may make a binding death benefit nomination in the form required to satisfy the Statutory Requirements.”
The Court held that the letter itself did not express sufficient intention for it to constitute a BDBN. Even if the SMSF stated that either a binding or non-binding nomination could be made, the letter did not specify the kind of nomination. The daughter’s claim was dismissed on the basis that if Mr Donovan had of intended the BDBN to be as such, he would have written it in another way.
Practitioners should ensure that BDBNs are specific and expressly state that they intend to bind the Trustee.
Narumon Pty Ltd (2018) QSC 185
March 1, 2022
Trust Basics
4 Comments
COVID-19 Business Hardship Grant
3 Comments
Burton – A Case for Change on International Double Taxation
No Comments
