Oh! What a Bind

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A “binding” death benefit nomination (BDBN) appoints the person(s) that you require your superannuation fund trustee (Super Trustee) to pay your superannuation death benefits (Death Benefits) to on your death. 

A Super Trustee is required to comply with a BDBN unless it is proven to be invalid: for example, because the maker did not have legal capacity at the time the BDBN was made. 

The Guardianship and Administration Act 1990 (WA) (Act) enables the State Administrative Tribunal (SAT) to appoint a guardian and/or an administrator for a person on application if that person is not capable of making reasonable judgements for themselves (Represented Person).  

The recent SAT decision of SM [2019] WASAT 22 clarifies the position in making a BDBN for a Represented Person.

In this case, the Represented Person (SM) was injured in a motor vehicle accident in late 2016.  After the accident, her mother was appointed as the administrator of her estate.  SM was later awarded about $5.7 million in compensatory damages for the injuries she sustained in the accident (Fund). The Court appointed Australian Executor Trustees Limited (AET) trustee of the Fund. 

AET was granted a limited administration order to deposit monies into superannuation for SM’s benefit.

Under s 292-295 of the Income Tax Assessment Act 1997 (Cth), SM, and thus AET, had 90 days from the date the Fund was received to make any contribution to superannuation. 

However, during the course of the proceedings AET also applied to SAT to be given the following additional function:

“AET as limited administrator has authority, in respect of any superannuation fund of which the represented person is a member, to make and renew any document which has the effect of directing or binding the superannuation trustee as to the payment of superannuation death benefits following the represented person's death…

SAT convened a hearing to consider the additional function. The key questions were:

Can SAT confer on an administrator the power to make or confirm a BDBN?

No. SAT did not have the power to give an administrator the function to make and renew any document that effectively bound/directed the Super Trustee to pay Death Benefits on the Represented Person’s death, as it would not be a function to conserve their estate for their benefit.

Can an administrator with plenary powers make a BDBN?

No. as making a BDBN is not a function to conserve the estate of a Represented Person for their benefit.

SAT’s reasoning for both answers was:

  1. the sole purpose of a BDBN is to deal with the Death Benefits on death;
  2. an administrator’s role is to protect the estate of the Represented Person during their lifetime;
  3. the appointment of an administrator ends on the Represented Person’s death; and 
  4. the Administrator has no duty to protect the estate of a Represented Person on their death.

Is making or renewing a BDBN a ‘testamentary disposition’ which means a plenary administrator is prohibited by s 71(2a) of the Act from making a BDBN?

The making or renewing of the BDBN by the administrator, in this case, was not a permissible function as it was a testamentary disposition. Whether a BDBN is considered a “testamentary disposition” will depend on whether the Represented Person had a legal entitlement to the object of the nomination and - if it was binding when made. In this case, the proposed BDBN was considered a testamentary disposition because SM had a beneficial interest in the money from the Fund paid into the superannuation fund during her lifetime and any BDBN did not take effect until she died.

Is it in the Represented Person’s best interests to grant the additional function if SAT has the power to do so?

No, because – to use the facts of the SM decision - if SM didn’t make a BDBN before her death, any money left in the Fund would just be paid to her legal personal representative.

Can a Represented Person make a BDBN?

Yes, with the administrator’s written authority and consent of SAT and if they have testamentary capacity.


This case is another example of the need for you to ensure you have your estate planning in place (regardless of age and circumstances). It is vital to ensure that if you lose legal capacity and/or upon your death, all documents have been properly prepared to give effect to your testamentary intentions, such as a BDBN. The BDBN can be non-lapsing (if your fund allows it) so if you lose legal capacity it will remain in place giving effect to your intentions regarding the distribution of your Death Benefits when you die.

Many people prepare superannuation Death Benefit nominations without knowing the rules that apply for them to be valid.  The Tribunal’s reasoning in SM [2019] WASAT 22, as to whether there is a legal entitlement to the object of the nomination and whether the nomination is binding when it is made, is telling. It shows that whether a BDBN or other nomination will be considered ‘testamentary’ is highly dependent upon the terms of the superannuation fund itself. 

Author: Elizabeth Mitchell

Zafra Disclaimer: this article is intended to provide commentary and general information only.  It should not be relied on as legal advice.  Formal legal advice should be sought in the particular transaction or matters of interest arising from this article. 

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