Binding death benefit nominations are an integral part of many
The ATO has released draft Self Managed Superannuation Funds
Determination 2008/D1, which sets out its views on the ability of
members of SMSFs to make a binding nomination.
The ATO confirms that the rules in the SIS Act and Regulations
in relation to binding nominations do not apply to SMSFs.
This means SMSF members have much more flexibility to use
binding nominations. For example, the ATO accepts that a binding
nomination by a member of a SMSF does not necessarily lapse after
It also follows that a binding nomination can cascade through
different beneficiaries depending on who is alive, and can regulate
the form the benefit is to take, as well as the recipient.
SMSFs are still bound by the payment rules in the SIS Act and
Regulations. This means that the recipient designated in a binding
nomination by a member of a SMSF must still be either a SIS law
dependant or the estate of the deceased member.
It is important to be aware that the ability of a member of a
SMSF to make a binding nomination will depend on the terms of the
fund's trust deed.
Clients and advisors need to carefully check the wording of the
trust deed to ensure it allows for a binding nomination –
particularly if the member wants to make a non-lapsing binding
Cooper Grace Ward has seen a number of recent trust deeds with
issues in binding nomination provisions. In some cases, the deed
does not actually permit the members to make a binding nomination
as it limits the power by reference to the provisions of the SIS
Act – which do not apply to SMSFs. Also many trust deeds
do not allow for non-lapsing binding nominations.
Cooper Grace Ward is hosting a seminar on superannuation and
estate planning on 29 October & 11 November where we will
discuss these and other relevant superannuation issues. Learn more
Superannuation Seminars .
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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