Advisors: don’t cut corners on death nomination forms
The Australian Securities & Investments Commission (ASIC) has released a media release warning the financial advice sector about the consequences of binding death benefit nominations (BDBNs) not being signed and witnessed correctly.
The release underlined that “taking short cuts which result in important forms being invalidated and thereby jeopardising the account holder's wishes does not meet the minimum advice and conduct standards expected by ASIC”.
Practices such as advisors signing as witnesses for clients when they were not present and backdating of BDBNs were specifically called out as both ‘improper and unethical’ and leading to poor client outcomes.
In addition to the issues raised in the media release, advisors should also consider issues such as whether
- the preparation of BDBNs constitutes legal advice that can only be provided by a qualified lawyer;
- the super fund trust deed permits BDBNs to be made or provides for them to lapse after a certain time;
- the witnessing and service procedures in the super fund deed has been properly followed;
- the super fund trust deed permits cascading appointment of beneficiaries under a BDBN;
- the tax and asset protection consequences of paying death benefits to the proposed beneficiary have been considered;
- the BDBN takes into account recent changes to the superannuation laws (such as the transfer balance cap);
- a reversionary pension is to take precedence over the BDBN; or
- an appropriate person will take control of the super fund on the death of the client.
To discuss this further or for more information please contact:
Nicole Stornebrink
Associate
T 03 5225 5209
E nstornebrink@ha.legal
