Death Benefit Agreement
Use Cleardocs to create, replace or confirm an SMSF member's death benefit arrangements, through:
- death benefit agreements; or
- death benefit nominations (binding or non-binding).
Time taken to complete 5-10 minutes.
Cost $ 77.00 (inc GST)
Legal Sign-offThe master documents are written in plain language and are signed-off by our lawyers at Maddocks.
What documents are included in the Cleardocs Death Benefit Agreement package?
The Cleardocs package includes:
- the single Death Benefit Agreement you need to create, replace or confirm the members' death benefit arrangements; and
- an Establishment Kit explaining what to do next.
What information do you need to order a Death Benefit Agreement through Cleardocs?
Our checklist sets out the information required to order a Death Benefit Agreement.
Cleardocs Deed required for Death Benefit Agreements
To create a new Death Benefit Agreement, the fund needs to have a Cleardocs deed that was purchased or updated on or after 4 May 2009. If the fund currently:
- has a Cleardocs deed, you can check which version it has by logging in at Cleardocs and clicking the light blue "Version X of Y" button beside the relevant SMSF in your list of documents; or
- does not have a Cleardocs deed, then you can update it to a Cleardocs deed for $126.50
(For any SMSF set up through Cleardocs, you receive Death Benefit Nominations or Agreements with the original package of documents you create.)
When are the Cleardocs death benefit arrangement documents useful?
The Cleardocs documents for SMSF death benefit arrangements are useful:
- for any old funds for which the members have not completed death benefit arrangements;
- for members who want to put in place a binding agreement that will not expire unless the member wants to make a change; and
- for any members for which existing arrangements may be either out of date or expired. Remember, the law says that after 3 years, a binding death benefit nomination expires if it is not confirmed. After it expires, the other trustees (or other directors of the trustee company) are free to distribute the relevant money any way they like (that is allowed under the fund's deed and superannuation law) — potentially, even to themselves.
The difference between Death Benefit Agreements and Death Benefit Nominations
The key differences between Death Benefit Agreements and Nominations are shown in this table:
|Option||Binding or non-binding||Expiring or "permanent"|
|Death Benefit Agreement||Always binding||Always permanent until the member revokes or replaces the Agreement|
|Death Benefit Nomination||Member chooses||
A non-binding nomination lasts until revoked or replaced
A binding nomination expires by law after 3 years. (There is some controversy about this point. You can read an article here by our lawyers at Maddocks about why they believe the three year limit applies.)
Why are Death Benefit Agreements and Nominations useful?
A member of a Self-Managed Superannuation Fund can use a Death Benefit Agreement or a Death Benefit Nomination to arrange who is to receive any amount payable under the fund when the member dies.
If there is no nomination or agreement, then normally the other trustees (or other directors) can distribute the relevant money at their complete discretion (in any way that is allowed under the fund's deed and superannuation law) — potentially, even to themselves.
How often should members consider creating, replacing or renewing their death benefit arrangements?
Creating: Members should consider making a new arrangement whenever their situation, or their dependant's situation, changes in a way that affects how the member would like their superannuation benefit to be distributed after they die. The member should consider this whether the member has an Agreement or a Nomination, binding or non-binding.
Replacing or confirming: Members with binding nominations that still reflect the member's wishes should consider confirming their nominations at least every 3 years — this is because of the 3 years limit discussed under the previous heading.
How much does it cost to update or renew an arrangement?
The Cleardocs fee for producing the forms to create, replace, or confirm:
- Death Benefit Agreement for any, or all, of the members of a fund is $77.00 (inc. GST). The fee is the same for one or more members — provided the agreements are ordered at the same time.
- the Death Benefit Nominations for any, or all, of the members of a fund is $49.50 (inc. GST). The fee is the same for one or more members — provided the forms are ordered at the same time.
If you order nominations and agreements at the same time for the same fund, then both fees apply — making a total of $121.00 (inc. GST).
Are Death Benefit Nominations binding?
The law, and the Cleardocs SMSF Deed, allow a member to set whether their Death Benefit Nomination is to bind the other trustees (or the other directors) or merely to guide them. If a member's Death Benefit Nomination:
- is binding, then the trustees (or the other directors) must arrange for the relevant amounts to be paid exactly as the member directed. However, the law says that a binding Death Benefit Nomination lasts for only 3 years. So a member needs to consider whether to make a new binding nomination, or to confirm the existing binding nomination, within 3 years after the date of the existing nomination. (There is some controversy about this point. You can read an article here by our lawyers at Maddocks about why they believe the three year limit applies.)
- is non-binding, then the trustees (or the other directors) still have a discretion as to how the relevant amounts are to be paid. That is, they are not bound to follow the member's wishes.
Some people use a binding Death Benefit Nomination in situations where the member thinks that the other trustees (or other directors) might distribute the money in a manner that is not consistent with the member's wishes. In some families, this is a likely scenario. They need to consider:
- keeping the binding Death Benefit Nomination up to date because it lasts for only 3 years from the date it was signed or last confirmed; or
- arranging a Death Benefit Agreement which is binding, and permanent until the member revokes it or replaces it.
FREE marketing letter
To help you explain to your clients the need for them to consider creating, replacing or confirming the members' death benefit arrangements, you can use the Cleardocs draft marketing letter. The summary in that draft letter is for information purposes only. We are not allowed to give advice. Also, because we do not know the member's or the fund's situation, we can give only information, not advice.
Seek legal advice
The Death Benefit arrangements information here should be considered general in nature, and in no way interpreted as legal advice. You must always seek your own independent legal, accounting and financial advice about your particular situation. The summary on this page is for information purposes only.
Questions or further information
If you have questions:
- about how to use Cleardocs, contact the Cleardocs helpline on 1300 307 343.
- about legal issues, contact the Cleardocs helpline on 1300 307 343. If you need advice, we will arrange for you to speak with a lawyer at Maddocks. The firm provides a free legal helpline in relation to the documents Cleardocs provides. If you require other legal advice in relation to your particular circumstances, then this will be charged for.
- Creates a permanent and binding death benefit arrangement
- Option to nominate a reversionary beneficiary
- No extra cost if ordered on SMSF set up.
- Includes copy function for address details - saving you typing
- Extensive online help and local phone support
- Easy to use question interface