When a Member dies, the Member’s benefit will be passed on to the beneficiaries or the Member’s legal personal representative. This can be done in the form of a Binding Death Benefit Nomination (BDBN), also referred to as an ‘SMSF Will’.
There has been a recent court case, Hill v Zuda Pty Ltd  HCA 21, regarding Binding Death Benefit Nominations (BDBN) that do not necessarily abide by superannuation legislation and regulations.
Mr. Sodhy and Ms. Murray were both Members of the Holly Superannuation Fund and Directors of Zuda Pty Ltd. A clause in the SMSF’s Trust Deed under ‘Binding Death Benefit Nomination’ stated that if either Member of the Fund died, the Trustee would be required to distribute the deceased Member’s whole balance to the surviving Member.
When Mr. Sodhy died on 22 November 2016, Ms. Hill, the only child of Mr Sodhy, argued that the binding death benefit nomination clause did not comply with the standards set by Reg 6.17A of the SIS Act.
The Supreme Court dismissed her argument on the basis that Reg 6.17A does not apply to SMSFs.
She furthered her appeal to the High Court and the High Court also held that Reg 6.17A does not apply to SMSFs.
This confirms that an SMSF is not bound by the standards of a BDBN set by the SIS Act. It appears that as long as the terms of the Trust Deed allow the BDBN, the BDBN would be valid.