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Can an Attorney Sign a Binding Death Nomination on My Behalf?

Superannuation

When a Principal appoints an Attorney to act on their behalf, the Attorney has a broad range of powers to make decisions in relation to personal health matters and/or financial matters on behalf of the Principal. When making the Enduring Power of Attorney, the Principal can choose to either limit or give additional powers to the Attorney.

When making decisions with respect to financial matters, an Attorney may have the power to deal with a Principal’s superannuation benefits.  The Court has recently considered whether an Attorney has the power to make or renew a Principal’s Binding Death Benefit Nomination (“BDBN”) in relation to the Principal’s Superannuation benefits.

A BDBN is a document used for the purpose of nominating beneficiaries to receive your superannuation benefits upon your death.  The document is a binding direction given to the Trustee of your Superannuation Fund. A BDBN can be made in favour of a:

  1. spouse;
  2. child;
  3. dependent; and/or
  4. Legal Personal Representative of your estate (in which case, the benefits will be paid to the beneficiaries named in your Will, or if there is no Will, in accordance with the rules of Intestacy).

Difficulties may arise if an Attorney needs to make a decision with respect to a Principal’s BDBN after the Principal has lost capacity.

Narumon Pty Ltd [2018] QSC 185 (“Re Narumon”)

The case of Re Narumon clarified the position as to whether an Attorney has the power to make, renew or extend a BDBN on behalf of a member of a Superannuation Fund.

Mr Giles was a member of the John Giles Superannuation Fund.  He made five (5) BDBNs between 2010 and 2013. The fifth BDBN was made in June 2013 and this nomination lapsed after three (3) years in June 2016.  Shortly after making this BDBN, Mr Giles was assessed by a Geriatric Psychiatrist as being “totally incapable of making financial, health and lifestyle decisions”. In January 2013, Mr Giles made an Enduring Power of Attorney appointing his spouse, Narumon, and his sister Rosyln as Attorneys. In November 2013, Narumon and Roslyn began acting as Mr Giles’ Attorneys.

In March 2016, Narumon and Roslyn signed a document to extend the BDBN made by Mr Giles in June 2013 for a further three (3) years.  The June 2013 BDBN provided for 5% of Mr Giles’ superannuation benefits to be paid to Roslyn and the remainder divided equally between Narumon and Mr Giles’ minor child, Nicholas (47.5% each).

However, Mr Giles’ Attorneys also signed a new BDBN which excluded Roslyn and split the superannuation benefits equally between Narumon and Nicholas. This new BDBN was signed as a precaution in case the nomination made in June 2013 was considered invalid, recognising the fact that Mr Giles’ sister was not a dependant as defined in the Trust Deed or section 10 of the Superannuation Industry (Supervision) Act 1993 (Cth) (“the Act”) and therefore was not eligible to receive any part of the death benefits.

Narumon sought declaratory relief from the Court on the various issues raised by the Attorneys’ actions.

The Court confirmed that there were no restrictions set out in the Trust Deed or the Act which would prevent an Attorney from executing a BDBN on behalf of a member.  The Court then considered whether any restrictions were imposed under the Powers of Attorney Act 1998 (Qld)The Court held that the making of a BDBN was a financial matter and was not a matter which must be performed personally by the Principal.  As such, the power to execute a BDBN could be delegated to an Attorney.

For these reasons, the Court held that the extension of Mr Giles’ June 2013 BDBN was valid. The Attorneys merely confirmed the nomination made by Mr Giles himself. However, as Mr Giles’ sister Roslyn was not his dependant, she was ineligible to receive her nominated 5% benefit.  Her inclusion in the BDBN did not, however, render the entire nomination invalid.

With respect to the new BDBN made in March 2016, the Court held that such BDBN would only be valid if the transaction was not a conflict of interest transaction (that is, where an Attorney or a relative of the Attorney benefits from the transaction).  Conflict of Interest transactions were not authorised under the terms of Mr Giles Enduring Power of Attorney.  The Court held that the new BDBN was a conflict transaction because of the change made (excluding Roslyn from the benefit) and was therefore invalid.

What are the implications of the decisions in Re Narumon?

This case confirmed that an Attorney has the power to make, renew or extend a BDBN for a Principal’s superannuation benefits, provided the Enduring Power of Attorney document does not impose any restrictions or conditions on such power.

When making an Enduring Power of Attorney, it is important for the Principal to consider:

  1. Whether they want to restrict an Attorney’s power to deal with their superannuation benefits (including the power to make, renew or extend a BDBN);
  2. If they do not want to restrict the Attorney’s power, is the Attorney authorised to make, renew or extend a BDBN in circumstances where a conflict of interest arises?

 If any of the issues raised in this article apply to your circumstances, or if you would like further clarification, please contact our office.