Within the legal profession, a question has often been asked that has had no clear answer – can an Enduring Power of Attorney extend a binding death benefit nomination for an incapacitated principal? In a recent decision of the Supreme Court of Queensland in Re Narumon Pty Ltd  QSC 185, this question was recently considered and a clear decision handed down.
The applicant, Narumon Pty Ltd, is the trustee of a self-managed superannuation fund established in 1992. The sole member of the fund was Mr John Giles who passed away in 2017, aged 80. Mr Giles was survived by his wife and a 16 year old son. He was also survived by 4 adult children from a previous marriage.
Whilst the value of the estate was approximately $200,000.00, the benefits accrued by Mr Giles in his self-managed superannuation fund were significantly greater – valued at approximately $4 million.
Mr Giles made 5 binding death benefit nominations between 2010 and 2013. In each nomination, Mrs Giles and their 16 year old son were the major beneficiaries. Indeed, the final nomination directed payment of 47.5% to Mrs Giles, 47.5% to his 16 year old son and the remaining 5% to his sister (the latter nomination was later held to be invalid as the sister was not considered to be a ‘dependant’ and therefore ineligible as a beneficiary). The notice stated that it would cease to have effect 3 years after it was signed, being 5 June 2016.
In November 2013, Mr Giles lost capacity to make any health or financial decisions.
On 16 March 2016, Mrs Giles and Mr Giles’ sister, in their capacity as Enduring Powers of Attorney for Mr Giles, signed an extension of his binding death benefit nomination.
One of the questions before the Court was whether the Attorney’s extension of the binding death benefit nomination was valid and binding.
Justice Bowskill held at  that the exercise of a right to extend a binding death benefit nomination fell within the meaning of a ‘financial matter’ under Schedule 2, Part 1 of the Powers of Attorney Act 1998 (Qld). Although not expressly included in the definition, a binding death benefit nomination nonetheless fell within the meaning of a ‘financial matter’ as it directed a trustee of a fund to pay benefits in a particular manner.
The next issue which was considered was whether the Attorneys had the power to extend the binding death nomination. In considering this question, Bowskill J considered the terms of the Fund deed, the sections of the Powers of Attorney Act 1998 (Qld) and relevant provisions of the Superannuation Industry (Supervision) Act 1993 (Cth).
In considering the terms of the Fund deed, it was held at  that there was nothing in the deed which prohibited an Attorney from signing a nomination on behalf of a member. In fact, clause 5.4(b) expressly authorised an Attorney to make decisions on behalf of an incapacitated member provided such decisions fell within the scope of their power of appointment.
At paragraph  of the Judgment, it was also held that the Commonwealth superannuation legislation did not restrict an Attorney from making a nomination as it was held that the terms of a Fund deed for a self-managed superannuation fund governed a member and not the Commonwealth legislation. As such, the Superannuation Industry (Supervision) Act 1993 (Cth) did not apply in this instance and therefore did not prevent an Attorney from extending a nomination.
At  to , Bowskill J also considered whether the nomination raised an issue of a conflict of interest between Mrs Giles as Attorney and Mrs Giles as beneficiary of the nomination. It was determined by her Honour that as Mr Giles had made a valid and effective nomination in 2013, and as the Attorneys were doing no more than confirming the existing nomination in order to ensure his wishes were respected, no conflict of interest arose.
As the extension did no more than confirm the existing nomination made by Mr Giles himself in 2013, the extension of the binding death benefit nomination executed by Mrs Giles and his sister, as his Enduring Powers of Attorney, was held to be an effective binding nomination.
In handing down her decision, Bowskill J highlighted a distinction between extending an existing nomination and creating a nomination for the first time, or purporting to amend or vary a nomination previously made by a member before a loss of capacity. In such instances, Bowskill J stated that different considerations will apply, including different considerations surrounding conflict of interest.
Whilst the binding death benefit nomination was held to be valid in this instance, Re Narumon Pty Ltd raises an important issue regarding Enduring Power of Attorney documents – depending on each person’s individual circumstances, it may be necessary to expressly authorise or restrict an Enduring Power of Attorney from creating, extending or varying an existing binding death benefit nomination to ensure your wishes are respected.
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