A new case has expanded upon this decision. Re Rentis Pty Ltd [2023] QSC 252 focused on a deceased, Robert, who had appointed his wife and his brother as attorneys under a valid Enduring Power of Attorney. Importantly, his Enduring Power of Attorney gave his attorneys the express power to “renew any binding death benefit nomination” that he had made.

Robert lost decision-making capacity in 2020. His wife died in the following year.

Robert had previously made a BDBN allocating a portion of his superannuation death benefits to his wife. Following her death, Robert’s brother (acting as his attorney) updated Robert’s BDBN to divide his member death benefits between Robert’s children and Robert’s Estate.

The Court in Re Rentis considered whether such nomination was valid under the Attorney’s power to ‘renew’ a BDBN. On a strict interpretation of the word ‘renew’, such power could allow the attorney only to re-confirm an existing nomination in the same percentages, for example where a previous nomination had lapsed after three years.

The Court decided, however, that a narrow interpretation “would produce capricious, unreasonable and certainly inconvenient results”, and that such a power in an Enduring Power of Attorney should allow the Attorney to update the principal’s nomination when circumstances had changed (e.g. on the death of a beneficiary).

While such decision has not yet been tested in Victoria, we at Tony Kelly Lawyer & Estate Planner are pleased with this update. One issue of concern for us when assisting clients with their BDBNs is that many funds do not allow a ‘default’ or ‘two-tier’ nomination; that is, clients cannot dictate what should happen to their death benefits if their first choice of beneficiary predeceases them, and the client is unable to update their nomination due to incapacity or otherwise. Such a ‘default’ nomination is usually possible with a self-managed superannuation fund (SMSF) but our efforts to convince industry funds to adopt a two-tiered nomination form have so far been unfruitful.

Allowing a principal’s attorney to update the principal’s BDBN circumvents this issue, as the attorney can ensure a valid BDBN is still in place if the principal’s first choice of beneficiary has died and the principal no longer has capacity to update their own nomination. Above all, this decision underscores the need to have a robust and comprehensive Estate and Succession Plan in place that includes not only a Will and Binding Death Benefit Nomination but also Powers of Attorney.

If your Estate and Succession Plan does not include all of the above, we recommend that you contact us today to set up a no-obligation consultation.

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The proceeding involved a member of an SMSF who no longer had legal capacity, and the purported extension of the member’s expired BDBN by the holder of his enduring power of attorney signing a document referred to as an “extension of death benefit binding nomination form”.

The Court upheld this as valid based on the provisions in the member’s trust deed which expressly allowed a validly appointed attorney/s to exercise any power given to a member in the deed if the member had a legally recognized disability. Importantly, the Court also found the member’s financial enduring power of attorney did not contain restrictions on the attorney’s power, and ruled that the purpose of signing such an extension was in accordance with the member’s original wishes.

If you are a members of an SMSF, it is pertinent for you to consider the issues raised in this case and take a few simple steps to ensure the following:

• That there are provisions within your deed to avoid any costly and unnecessary complications by checking that the fund’s deed allows a member to make a “non-lapsing” BDBN so that it does not need to be renewed every three years and to prepare a BDBN accordingly;
• Consider whether you are comfortable granting your power of attorney the authority to make an amendment to your BDBN due to loss of mental capacity if circumstances were to change;
• If so ensuring that your power of attorney document provides an express clause in which the attorney’s power is addressed regarding your BDBN with any desired limitations, and
• Further, depending on circumstances and jurisdiction, it may also be necessary to provide a clause which expressly permits the attorney to defend any attempts by a party who objects to alteration of the terms of the BDBN by your attorney.

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