Can a superannuation fund accept a binding death benefit nomination executed under a power of attorney? This is a question funds have been asking for a long time. Finally, we have some answers.
On 24 August 2018, the Supreme Court of Queensland considered this question in depth in Re Narumon Pty Ltd  QSC 185. In a nutshell, Bowskill J held that:
- confirmation of the deceased member’s existing binding nomination COULD be executed under a power of attorney BUT
- the new binding nomination could NOT be executed under a power of attorney (primarily because the Court found that the attorney had a conflict of interest).
Her Honour found that different treatment was necessary because executing the new binding nomination was a conflict transaction (not authorised by the deceased member). In contrast, the confirmation was merely extending the timeline for the deceased’s wishes (even though there was also a conflict for this document).
The Court’s answer in Narumon will not automatically apply in every case.
This case involved an SMSF, so it was not necessary for the Court to consider the SIS provisions governing binding nominations, although Her Honour did observe that there does not appear to be any restriction in SIS that would prevent an attorney, under an enduring power of attorney, from executing a binding nomination on behalf of a member.
In fact, this decision turned on the constructions of the Power of Attorney Act (Qld).
Whether a valid binding nomination can be executed under a power of attorney requires considering:
- the laws of the relevant State or Territory (in particular the laws governing powers of attorney)- Tasmania is the only jurisdiction that specifically refers to superannuation;
- the general law (including fiduciary duties and laws of conflict);
- the power of attorney document in question (which might, for example, specifically allow an attorney to act if there is a conflict);
- the Fund’s trust deed – many now state that a binding nomination executed by a member’s attorney will not be binding on the Trustee;
- superannuation law (SIS) – which is addressed in detail in the Narumon case; and
- the type of superannuation fund – the Narumon case involved a SMSF and different considerations apply to other types of funds.
Interestingly, Her Honour also found that the binding nomination was not entirely invalid even though 5% of the benefit was left to a person who was not a dependant – it was only invalid to the extent of that portion.