Knowledge Bank
What Is A Binding Death Benefit Nomination?
Quick Answer
A Binding Death Benefit Nomination, commonly called a BDBN, is a formal instruction to your super fund directing where your superannuation benefit should be paid after you pass.
If the nomination is valid and names someone who can receive the benefit, the fund will generally be required to follow it.
A BDBN is separate from your Will, but both should support the same considered intentions.
Without a valid binding nomination, the fund may need to decide where the benefit should be paid.
Introduction
Your Will does not automatically control your superannuation.
A Binding Death Benefit Nomination is one way of giving your super fund a clear direction about where the benefit should be paid.
It may direct payment to an eligible person or to your estate.
The nomination should not be treated as a separate administrative form. It should support the intentions carried through the rest of your estate plan.
What Does “Binding” Mean?
Not all beneficiary nominations operate in the same way.
Binding Nomination
If a binding nomination is valid, the fund will generally be required to follow it.
Non-Binding Nomination
A non-binding nomination tells the fund who you would prefer to receive the benefit.
The fund considers that preference but may still decide where the benefit should be paid.
Not every fund offers every type of nomination, so the options available should be checked with the fund.
Who Can Be Nominated?
A BDBN cannot simply name anyone you choose.
The available recipients are generally limited to:
- a current spouse or partner;
- a child of any age;
- someone financially dependent on you;
- someone in an interdependency relationship with you; or
- your estate.
The circumstances should be checked carefully before completing the nomination, particularly where relationships or dependency arrangements are not straightforward.
Should The Benefit Be Paid Directly Or To The Estate?
A BDBN may direct the benefit:
- directly to one or more eligible people; or
- to your estate.
Direct Payment
If the benefit is paid directly to an eligible person, it does not pass through your estate or your Will.
Payment To The Estate
If the benefit is paid to your estate, your Will then determines how it is dealt with.
This may allow the benefit to form part of broader arrangements contained in the Will, including a Testamentary Trust where appropriate.
Which pathway is suitable depends on the family circumstances, the intended beneficiaries and what the wider estate plan is designed to achieve.
Completing The Nomination Correctly
A BDBN only works as intended if it is completed according to the fund’s requirements.
You should:
- use the fund’s current form or process;
- nominate only people or your estate who can receive the benefit;
- follow the signing and witnessing instructions;
- make sure the nominated percentages are complete; and
- check whether and when the nomination may expire.
A nomination that is incomplete, incorrectly signed or names someone who cannot receive the benefit may not be effective.
What Happens Without A Valid BDBN?
Without a valid binding nomination, the fund usually decides where the benefit should be paid.
It may consider:
- the people who are eligible;
- the fund rules;
- any non-binding nomination; and
- the family circumstances.
The outcome may not be the same as the intentions recorded in your Will.
Does A BDBN Expire?
Some binding nominations expire, commonly after three years.
Others do not automatically expire and remain in place until they are changed or revoked.
The rules depend on the fund and the type of nomination available.
A nomination can also remain legally effective but no longer reflect your family circumstances or current estate plan.
Practical Point
A nomination can be legally current but personally outdated.
Check both whether it remains valid and whether it still reflects what you want.
A Valid Nomination That No Longer Fits
Consider someone who completed a binding nomination several years ago directing their superannuation to their estate.
Since then, their family circumstances and Will have changed.
The nomination may still be valid, but that does not necessarily mean it still supports the current plan.
The important questions are:
- Is the nomination still effective?
- Does it name the intended recipient?
- Does the selected pathway still work with the current Will?
A BDBN needs to remain both valid and appropriate.
What About A Self-Managed Super Fund?
BDBNs for Self-Managed Super Funds need particular care.
The trust deed and the people who control the fund after a member passes can affect how the nomination operates.
The nomination should therefore be checked against the trust deed and the fund’s succession arrangements.
Common Mistake
“I completed a BDBN years ago, so it must still be effective.”
Some nominations expire.
Others may remain valid but no longer reflect your family circumstances or current estate plan.
A BDBN should be checked for both validity and continuing suitability.
Frequently Asked Questions
Is A BDBN Part Of My Will?
No.
It is completed through your super fund and operates separately from your Will.
The two arrangements should still support the same overall intentions.
Can I Nominate Anyone I Choose?
No.
The available recipients are limited under the superannuation rules.
They generally include a spouse or partner, a child, someone financially dependent on you, someone in an interdependency relationship with you, or your estate.
Can I Nominate My Estate?
Yes.
This directs the benefit to your estate, where your Will can then determine how it is dealt with.
Whether that is the best pathway depends on the wider estate plan and the people you want to benefit.
Do All BDBNs Expire?
No.
Some nominations lapse, commonly after three years, while others remain in place until they are changed or revoked.
The fund’s rules and nomination process determine what applies.
Final Thoughts
A Binding Death Benefit Nomination gives your super fund a clear direction about where your benefit should be paid.
Its value depends on more than completing a form.
The nomination must be valid, name someone who can receive the benefit and continue to reflect your circumstances and intentions.
Your BDBN and your Will may operate through different pathways, but they should remain parts of the same continuing plan.