Court sheds light on an enduring attorney’s right to extend a BDBN

04 August 2018


A significant ruling was recently handed down in the Queensland decision of Re Narumon Pty Ltd regarding an attorney's right to extend a member's binding death benefit nomination.

The facts

Mr Giles, the sole member of his SMSF, appointed both his wife and his sister (“Attorneys”) as his enduring attorneys for both financial and health matters by executing an enduring power of attorney (‘EPOA’) in early June 2013.

In the period between 2010 and 2013, five binding death benefit nominations (‘BDBN’) were signed by the member.  While differing in their percentages, in substance the nominations were generally in favour of his wife Mrs Giles, their son Nicholas and some other relative, such as his sister.  

When he was deemed to have lost mental capacity in August 2013, the latest binding death benefit nomination had been signed on 5 June 2013 (“2013 BDBN”) but was expressed to lapse after 3 years.  The beneficiaries under the nomination were Mrs Giles, Nicholas and Mr Giles’ sister.

In order to maintain his wishes, in March 2016 his Attorneys executed a document titled ‘Extension of binding death benefit nomination’ which extended the 2013 BDBN by a further 3 years (“BDBN extension”).

They also executed another BDBN in favour of Mrs Giles and Nicholas. Mr Giles’ sister was not included as they realised she was not an eligible beneficiary under the superannuation laws.

After the member’s death in June 2017, the trustee of the SMSF applied to the Court for declarations and orders to clarify uncertainties about certain documents for the Fund, including the BDBN extension.


The Court made the following findings in relation to the 2013 BDBN and its extension.

The 2013 BDBN was valid, except to the extent that it allocated a portion of his death benefit to his sister, who was not an eligible beneficiary. That portion is to be allocated as per the trustee’s discretion.

The Attorneys were not prohibited by the terms of the trust deed to sign a nomination on behalf of a member, nor were they prohibited to do so by the superannuation laws. Instead, the trust deed expressly allowed an enduring attorney (who had been validly appointed under an EPOA) to exercise any right or power given to a member under the terms of the trust deed if the member were under a legal disability.  As a result, since the member had a right to make a BDBN, the Attorneys had the authority to sign one too.

Pursuant to the EPOA, the Attorneys were given the authority to make financial decisions on behalf of the member, which the Court interpreted as including the signing of a BDBN.

While on the face of it, it appears that the Attorneys (and in particular Mrs Giles) entered into a conflict transaction, which had to be expressly permitted by the EPOA, when she executed the extension allocating Mr Giles’ death benefit to herself and her son, the Court found that there was in fact no conflict transaction.  As demonstrated by the pattern established by Mr Giles throughout his 5 nominations, his wishes were clearly for his wife and son to receive his death benefit.  Accordingly, the Court’s view was that all the Attorneys did was ensure his wishes were carried out as he intended, which was in line with the Attorneys’ duty to act in Mr Giles’ best interest.  The fact that one of the Attorneys benefitted from their actions did not breach the duty they owed to him.

Since the BDBN extension was held to be valid, the validity of the new BDBN made by the Attorneys was not considered.

The judgement did not address the situation where an attorney makes a BDBN on behalf of a member who had never made one before, or amends/varies an existing BDBN, however it notes that in these circumstances, various considerations would need to be taken into account, such as the scope of the attorney’s authority, their authority to enter into conflict transactions, whether the act is in the interest of the principal, etc.

Lastly, the Court agreed with previous judicial decisions and confirmed that section 59(1A) and regulation 6.17A of the Superannuation Industry (Supervision) Act do not apply to self-managed superannuation funds.

Take away points

So, if you want your attorney to be able to make, vary or revoke a BDBN on your behalf then:

-    the trust deed should contemplate the member giving authority to their attorney to exercise any powers conferred on the member under the terms of the trust deed,

-    for certainty, it is best if the trust deed expressly allows an attorney to make, vary or revoke a member’s BDBN on their behalf,

-    the scope of the EPOA must be wide enough to include the signing of a BDBN – at the very least it needs to allow an attorney to deal with the principal’s financial affairs – and must not include an express limitation on the attorney’s power in relation to BDBN,

-    the EPOA may need to allow an attorney to enter into conflict transactions, and

-    evidence of a member’s intention as to the allocation of their death benefit is pivotal, including any previous nomination (whether binding or non-binding) by the member and other evidentiary documentation.

While the case only dealt with the extension of the member’s lapsed BDBN by their attorneys, the reasoning of the case may similarly be applied to an attorney making a brand new BDBN on behalf of the member.  However, the question of whether the new BDBN is valid will be determined on a case by case basis having regards to the specific circumstances of the case.


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