Sunday, October 12, 2008

Binding death benefit nominations need careful consideration

Advisors have a role to play in stimulating their clients to think about and initiate estate planning.
Estate planning has arisen again in importance due to the popularity of self managed superannuation funds (SMSF).
In most SMSF's there is embedded a requirement to nominate a beneficiary (this is known as a binding death benefit nomination) so that the trustee can have some clear direction to pay out benefits in a certain manner in the event the member dies.
However this nomination may effectively thwart the mechanisms and clauses contained in a member's will.
Accountants who provide advice in this area may be providing legal advice. In most states in Australia this role is limited to legal practitioners.
The action of completing a binding death benefit nomination is a key part of an estate plan and needs to be undertaken with awareness of the overall intention of the the client regarding the disposal of his assets upon death.
Usually accountants are involved in estate planning to the extent of advising the clients' solicitor as to the assets held by the client and possibly the intended outcome of a will.
The binding death benefit nomination must be considered as equivalent to the drawing up of a will.

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