SUPERANNUATION NOMINATIONS AND ENDURING POWERS OF ATTORNEY

An interesting question has recently appeared in estate planning.  Can an attorney under an enduring power of attorney make, alter or revoke a superannuation binding death benefit nomination (“BDBN”) for their principal if the principal lacks mental capacity?   By analogy to wills some people may think that an attorney cannot do such acts.  While it is settled in law that a principal cannot delegate to their attorney a power to make, alter or revoke a will, the recent Supreme Court of Queensland decision of
Re Narumon Pty Ltd [2018] QSC 185 shows that in some circumstances an attorney may make or alter a BDBN.  

In 2013 Mr Giles, who was a member of a self managed superannuation fund, made a BDBN nominating his wife a beneficiary for 47.5% of his death benefits, his son for another 47.5% of his death benefits and his sister for the remaining 5% (“the 2013 BDBN”) [1].  Importantly, the 2013 BDBN stated it would expire three years after it was made.  Some time after signing the 2013 BDBN, Mr Giles lost capacity to make financial decisions.  His wife and sister started managing Mr Giles’ financial affairs as his attorneys under an enduring power of attorney.  Mr Giles’ attorneys extended the 2013 BDBN for another three years while otherwise confirming it and later they made a new BDBN excluding Mr Giles’ sister and leaving 5% of the death benefits which would go to her to Mr Giles’ wife and son equally.  The Court found that because the superannuation deed and superannuation laws do not expressly prohibit an attorney making a BDBN, there was no reason to conclude that making a BDBN is an act that must be personally performed by a member of a superfund.  The Court decided that Mr Giles’ attorneys could extend the 2013 BDBN as this act was to ensure continuity of Mr Giles’ wishes in the 2013 BDBN.  But Mr Giles’ wife and sister were not authorised to make the new BDBN under the enduring power of attorney as it represented a conflict transaction that was not authorised by Mr Giles (without an express authority attorneys cannot make gifts of the principal’s property to themselves or others).

The practical implication of the above decision is that, subject to a superannuation deed and superannuation laws, an attorney under an enduring power of attorney may be able to make a new BDBN for the principal if there is an express authority in the power of attorney document authorising conferral of benefits on the attorney or others.  If the Court decision is adopted in NSW an attorney may be able to extend a BDBN to prevent it lapsing even if a power or attorney document is completely silent on it. 

You may wish to consider what you would like your attorney to do with respect to your BDBN and seek a legal advice whether to expressly include in your enduring power of attorney an authority for your attorney to confirm, extend, revoke or make a BDBN, or expressly exclude such an authority, or leave your current enduring power of attorney as is. 

[1] Re Narumon Pty Ltd [2018] QSC 185

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