When does a binding death benefit nomination expire?

What a binding death benefit nomination is

A binding death benefit nomination (often shortened to BDBN) is a written direction from a member to the fund’s trustees about who should receive their super if they die. If it’s valid, the trustees must follow it.

Without a valid binding nomination, the remaining trustees decide who receives the benefit, following the trust deed and super law. That may not be what the member would have chosen, and disagreements over death benefits can end up in court.

A nomination can only direct super to people the law allows to receive it: generally a dependant (such as a spouse or child) or the member’s estate, through their legal personal representative (usually the executor of their will).

Where the three-year rule comes from

The super regulations (regulation 6.17A of the Superannuation Industry (Supervision) Regulations 1994) set out how a binding nomination must be signed and witnessed, and say it lapses after three years unless it’s renewed.

In 2022, the High Court confirmed that this regulation doesn’t apply to SMSFs (Hill v Zuda Pty Ltd). For an SMSF, the trust deed sets the rules: whether binding nominations are allowed, how they must be made, and whether and when they lapse. A deed can still adopt the regulation’s requirements, and many deeds include a three-year limit of their own.

Why the expiry date matters

If a nomination has lapsed under the deed, or wasn’t made the way the deed requires, it may not bind the trustees. The decision then falls to the remaining trustees. Nominations are easy to forget because nothing happens when one lapses: there’s no reminder unless someone keeps track of the date.

What to check

These are the questions to take to your trust deed, and to your lawyer or adviser if the deed isn’t clear:

1. Does the deed allow binding nominations, and does it allow non-lapsing ones?
2. How must a nomination be made: in writing, signed, witnessed, and given to the trustees?
3. When was each member’s current nomination signed, and under the deed, has it lapsed or is it about to?
4. Does every member have a nomination at all?
5. Can the people named still receive the benefit? A divorce or separation, for example, can change that.
6. Is there a record, such as a trustee minute, showing the trustees received it?

How SMSF Cockpit helps, and where it stops

The BDBN tracker records each member’s nominations, with their type and date. For a three-year binding nomination it works out the expiry as 36 months after the date, and warns you 90 days beforehand. A non-lapsing nomination never shows as expired. When a member makes a new nomination, the older one is marked as replaced. A separate check flags a member who has no nomination at all.

What it doesn’t do: it checks dates, not whether a nomination is valid. It can’t tell whether the nomination was signed and witnessed the way your deed requires, or whether the people named can still receive the benefit. It also only knows two kinds of nomination: one that lapses after three years, and one that doesn’t lapse. If your deed sets a different period, don’t rely on the tracker’s expiry date.