Enduring Power of Attorney

In a recent case, the Supreme Court of Qld confirmed that an attorney has the power to make, renew or extend a BDBN on behalf of a member.

Can an attorney under an Enduring Power of Attorney (EPOA) make or renew a binding death benefit nomination (BDBN) for a member?

In a recent case, the Supreme Court of Queensland confirmed that an attorney has the power to make, renew or extend a BDBN on behalf of a member [Re Narumon Pty Ltd [2018] QSC 185].

In this particular case, Mr Giles was a member of the John Giles Superannuation Fund.  Mr Giles made five BDBNs between 2010 and 2013.  The latest was dated 5 June 2013 and was in the form of a lapsing nomination which would expire after three years (ie 5 June 2016).

Mr Giles lost capacity in November 2013 and in March 2016 his attorneys, spouse and sister signed a document to extend the June 2013 nomination for a further three year period.  The June 2013 BDBN provided for 5% of Mr Giles’ benefit to be paid to his sister and the remainder divided equally between his spouse and minor child (47.5% each). 

At the same time, Mr Giles’ attorneys also signed a second document – a new BDBN – which slightly altered the allocation of benefits to exclude Mr Giles’ sister. This change was made as protection in case the June 2013 nomination was otherwise considered invalid because Mr Giles’ sister was not a dependant and therefore not eligible to receive a death benefit from the fund.  Mr Giles’ sister was one of the attorneys who signed the new BDBN and hence was not disputing her exclusion.

In relation to the attorney issue, the Court held that:

  • there does not appear to be any restriction in SIS which would prevent an attorney under an EPOA from executing a BDBN on behalf of a member,
  • there was nothing in the deed itself which would prevent an attorney signing a nomination for a member, and
  • therefore, the question of whether an attorney could execute a nomination depended on the relevant Power of Attorney Act.

In terms of the relevant Power of Attorney Act, the Court further held that the making of a BDBN was:

  • a financial matter
  • not a matter which must be performed personally (ie it was not a testamentary act), and
  • therefore could be delegated to an attorney

However, the renewal of the BDBN or the making of the new BDBN would only be valid if the transaction was not a conflict transaction.  This was because one of the attorneys or their relatives benefited from the transaction and the EPOA document did not authorise Mr Giles’ attorneys to enter into a conflict transaction (of any particular type or generally).

Ultimately the Court decided:

  • the extension of the original BDBN was not a conflict transaction because the attorneys did no more than confirm the nomination made by Mr Giles himself.  It was therefore valid, but
  • the new BDBN was a conflict transaction and, in the absence of Mr Giles’ EPOA document allowing such a conflict, the new BDBN was invalid.
  • Interestingly the Court also considered the fact that the June 2013 BDBN (legitimately extended in 2016) included a benefit payment to Mr Giles’ sister and concluded that:
  • as expected she was not Mr Giles’ dependant (for SIS purposes) at the time of his death and was therefore ineligible to receive a death benefit directly from his superannuation balance, but
  • this did not make the entire BDBN invalid; it simply meant that the payment to her could not be made.  The payments to Mr Giles’ spouse and minor child were unaffected.

This case provides some certainty on the issue of attorneys making/renewing/changing BDBNs on behalf of members.  However, it also emphasises:

  • the importance of ensuring, where appropriate, EPOA documents specifically deal with the issue of whether attorneys are to be able to make, renew or change a BDBN, and
  • where applicable, the EPOA documents specifically deal with whether or not attorneys are able to enter into conflict transactions.  Given that the attorney will often be a family member who might ordinarily expect to benefit from the superannuation death benefit (eg a spouse), this is particularly important for superannuation matters.

Going forward attorneys seeking to make, renew or change a BDBN on behalf of a member should exercise their powers taking into account:

  • the member’s wishes
  • the terms of the fund’s trust deed, and
  • the terms of the EPOA document

Source: Heffron

PSQ 4116. The information provided in this document, including any tax information is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. Millennium 3 Financial Services Pty Ltd ABN 61 094 529 987, AFSL 244252.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of M3’s position and are not to be attributed to M3. They cannot be reproduced in any form without the express consent of the author.

Last Updated:15-10-2019 09:50