We all need to take a holistic view of our financial affairs and this needs to extend to the transfer of wealth on death. This is especially so if you have a self-managed superannuation fund.
Self-managed super funds are unique in that the members jointly control the fund as all members of the fund must be trustees (or directors of the trustee company). In the absence of a valid binding death benefit nomination from the member, it is the surviving trustee(s) and/or the executor of the estate that ordinarily make the death benefit payment decision on the death of a member.
In some cases it may be impossible for the member to have confidence that those who will remain in control of the self manages super fund will follow their testamentary wishes.
This may be the case in a second marriage where there are children from the first marriage who are to benefit from superannuation. Alternatively, some members are concerned that even their first spouse of many years could be unduly influenced by a subsequent spouse to the detriment of their children.
In these cases a valid binding death benefit nomination can provide surety of outcome in terms of the final destination of superannuation death benefits. But a binding death nomination is the inability of the surviving trustee(s) to make a decision based on the taxation and other applicable laws at the time of death. Also binding death benefit nominations ordinarily expire every three years. This means there is potential for a breakdown in the validity of the nomination.