The Importance of a Binding Death Benefit Nomination

KEY TAKE-OUTS

Having a Binding Death Benefit Nomination form completed is crucial to ensure your chosen beneficiary inherits your superannuation as intended.

A former magistrate has settled for an undisclosed amount with his deceased fiancé’s mother after he was successfully awarded her entire superannuation death benefit by REST Superannuation.

The former magistrate Rodney Higgins’ controversial relationship with Ashleigh Petrie came to an unfortunate end in 2019 when Ms Petrie was killed by a car that year. The couple sparked controversy over the 45 year age gap between them and the fact that Ms Petrie was Mr Higgins’ court clerk. Shortly after her death, Mr Higgins, as her de facto partner, made a claim to Ms Petrie’s superfund, REST Superannuation, and was awarded the $180,000 payout. This was in spite of Ms Petrie’s nomination with the superfund that her mother inherit the death benefit.

Ms Petrie’s mother challenged the distribution, however, the superfund stood by their decision. This is because the nomination made with the superfund was not binding, and the fund retains discretion in terms of the distribution. The payout was not made to Ms Petrie’s mother as she did not fit the definition of ‘dependent’ under superannuation law, whereas Mr Higgins as her spouse, did. After months of negotiation, a settlement was fortunately reached between the parties. The details are confidential, but some reports indicate that Ms Petrie’s mother received approximately half of the benefit.

The important takeaway from this case is the importance of a binding death nomination, which we include as a part of our estate planning process at Coutts. Completing a binding death benefit nomination form is also important because your superannuation is not included in the estate distribution under your will. By making a binding nomination, this helps to ensure that your death benefit is distributed to the person you nominate, rather than who is chosen by the superfund. You should also keep in mind that most binding death benefit nominations expire after two or three years depending on the superfund, so it is important to keep these updated.