Witnessing binding nominations

When Signing and Dating Documents Leads to Unintended. What is non binding nomination? How often do binding nominations need to be renewed? Are binding death nominations outdated? Improperly witnessing superannuation binding nominations was a common practice amongst NAB staff , potentially leaving the documents invali the banking Royal Commission has heard.

ASIC says it has become aware of a “widespread practice” among financial advisers of witnessing , or having staff witness , the signing of Binding Death Benefit Nominations by clients without being present. In some cases binding nomination forms have been backdated. However, most funds will impose a witnessing requirement to preclude disputes subsequently arising as to whether the nomination was, in fact, signed by the member. It is crucial that binding death benefit nominations are signe witnessed and dated in accordance with legal requirements and the terms of the SMSF deed.

Put simply, a binding death benefit nomination is a legally binding nomination that allows you to advise the trustee who is to receive your superannuation benefit in the event of your death. Check documents for specific witnessing requirements, for example, two independent witnesses are required for binding death benefit nominations , and a qualified witness is required for Enduring Powers of Attorney in most states and territories. Read documents carefully (or ensure your clients do) before signing. Improper witnessing of the form can make it invali resulting in the death nomination being rejected.

A few quick things to know: You need to update your binding nomination every three years to keep it active. Witnessing of binding death benefit nominations: One, two or none? Will all nominations lapse after years?

Must all nominations be witnessed by independent witnesses (in the manner of a will)? The to these questions depends on whether the fund is an SMSF and whether or not the nomination is a lapsing or non-lapsing nomination. ASIC has become aware of a widespread practice among financial advisers of witnessing or having staff members witness client signatures on binding death nomination forms without being in the presence of the signatory. In other cases, forms have been backdate the watchdog said in a statement. As binding nominations require a formal nomination , much like a Will, and must be renewed every three years, or whenever your circumstances change, they may not be suitable for everyone.

If certainty already exists, for example, where there is a sole dependant, a binding death nomination may be of little value. As long as it’s valid and in effect at the date of your death, the nomination is legally binding and the Trustee mustpay your benefit to the Beneficiaries you have nominated in the proportions set out in this form (subject to certain exclusions such as family court orders). The proper execution of binding death nomination forms is important because this form directs the trustee of the superannuation fund to pay superannuation and insurance benefits in accordance with the account holder’s instructions. ASIC warns licensees over death nominations The corporate regulator has cautioned Australian financial services licensees against taking shortcuts when witnessing signatures on binding death benefit nomination forms for superannuation benefits. Common Issues Surrounding Binding Death Benefit Nomination By: Gabriela Rusu The financial services Royal Commission heard a litany of examples of inappropriate advice and misconduct, including improperly completing and witnessing binding death benefit nominations (BDBNs), creating the potential for such nominations to be rendered invalid.

A valid binding death benefit nomination (non-lapsing) won’t expire unless you amend or cancel it. A binding death benefit nomination doesn’t take effect until it’s been received and accepted by the Trustee. If a member completes a binding death benefit nomination in the correct form, the trustee must distribute the death benefits to the nominated beneficiary or beneficiaries in the proportions specified and has no discretion to vary or override the allocation.

As such, applying the same example, a binding nomination would have ensured that all of the deceased’s benefits were divided equally between his children. When you sign this binding nomination, your signature must be personally witnessed by two people aged years or over who are not nominated beneficiaries. A nonbinding nomination will not override a current valid binding nomination.

Binding death benefit nomination In contrast, binding death nominations may be readily accepted by the trustee when made, but may not be tested for validity until a member’s death benefit becomes payable. A binding nomination must be revoked before a non- binding nomination can take effect. Some SMSFs’ governing rules may have specific criteria that need to be met when making a valid binding death nomination.

Binding nominations are subject to specific legislative conditions and witnessing formalities, and will lapse if they are not updated every three years. Non- binding nominations When you make a non- binding nomination , your wishes about who should receive your Death Insurance benefits when you die are a guide only and are not binding on the Trustee. The Trustee will take your death insurance benefit nomination into consideration, but it is the Trustee who makes the final decision.