04 Mar Binding Death Benefit Nomination – Corporate Trustee not always the answer
Wooster v Morris – Mr and Mrs Morris established a SMSF with themselves as individual trustees. Mr Morris passes away and his Binding Death Benefit Nomination leaves his benefits to his 2 adult daughters. Nothing for Mrs Morris.
Mrs Morris, as trustee, appoints her son as co-trustee and engage a law firm who later argue in court that the binding death benefit nomination was invalid as it was not delivered to Mrs Morris in an appropriate way. Prior to going to court, the law firm has replaced the individual trustees with a corporate trustee, ignored the binding death benefit nomination and Mrs Morris paid the husbands benefits to herself.
The Supreme Court upheld the Binding Death Benefit Nomination, stating that it was valid and the benefits were payable to the daughters. The court also found that the corporate trustee and Mrs Morris were held responsible for the court costs as the trustees had not acted with the necessary duty of care of a Super Fund trustee.
This case demonstrates again the importance binding death benefit nominations and the need for planning and correct structuring of superannuation funds prior to “problems” arising.