What happens in the event a member dies and no Binding Death Benefit Nomination (BDBN)?
Where a member dies and no BDBN is in place two options exist
- Where nomination was made. The trustee of the fund is obligated to administer the deceased member’s benefits in the best interests of the member. Normally, the trustee would make enquiries about the member’s personal and family situation, did they have dependents, did a will exist and make their decisions accordingly.
- A Non-Binding Nomination exists. This nomination may provide guidance, but it is not a direction to the trustees. A deceased member who has directed how property is to be passed on may have assumed that superannuation will follow in the same manner. The trustee is bound to follow the will they can make their own determination. Unfortunately, this tends to leads to disputes, so it is recommended to have a BDBN in place.
REMEMBER, the above are issues that auditors focus on when it comes to the audit of a SMSF. Our audits for funds start from $300 and follow a comprehensive audit plan.
DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.