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SMSF – Assessing Capacity to Make a Binding Death Benefit Nomination (BDBN)

In the realm of self-managed superannuation funds (SMSFs), the recent case of van Camp v Bellahealth Pty Ltd [2024] NSWSC 7 has shed light on the crucial aspect of evaluating an individual’s capacity to make Binding Death Benefit Nominations (BDBNs). 

This case, which involved a superannuation beneficiary nomination made in the hospital shortly before the individual’s passing, has significant implications for understanding the validity and importance of BDBNs.

Summary of the Facts

Dr Harry Nespolon was the sole member of a self-managed superannuation fund (SMSF) and was the sole director of the corporate trustee company called Bellahealth Pty Ltd (Trustee).

On the day he died, at age 57, Dr Nespolon, signed a binding death benefit nomination (BDBN) directing the Trustee to pay the whole of his member benefits worth about $4.7million including the life insurance component to his de facto spouse, Ms Lindy van Camp.  At the time of signing Dr Nespolon was in palliative care in the ICU and was receiving opioid medication.

Interestingly, the new BDBN was contrary to Dr Nespolon’s intentions which he had previously expressed to his professional advisors and contrary to his Will being that his superannuation member benefits be paid to his estate so that:

  1. The funds could be used to pay his debts, which were substantial; and 
  2. The balance then remaining could be held in trust for his tax dependents, Ms Lindy van Camp and their two minor children.

The Claim

The Trustee and other defendants:

  1. Claimed that Dr Nespolon did not have capacity to make the BDBN at the time it was signed;
  2. Alleged that there was unconscionable conduct on the part of Ms van Camp in procuring the BDBN and that because of this the BDBN should be set aside.

Evidence was put before the court from advisers and medical professionals as well as various documents relating to Dr Nespolon’s interactions and his understanding of the BDBN. 

The doctor who witnessed the BDBN gave evidence as to Dr Nespolon’s capacity at the time and other expert evidence was given by another doctor about the effects the various drugs Dr Nespolon was on at the time would have had on his capacity. 

Evidence was given to the Court that Dr Nespolon’s solicitor had prepared a written advice which was included in the covering email which was attached to the BDBN about the legal consequences of the BDBN but that Ms van Camp did not provide Dr Nespolon with that advice. 

The Outcome

The Court ultimately found that:

  1. Dr Nespolon did have the capacity to understand the general effect of the BDBN at the time he signed it;  and
  2. There was no evidence of unconscionable conduct by Ms van Camp even though she was involved in the urgent preparation of the BDBN and did not give Dr Nespolon the written advice prepared by his solicitor about the legal effect and consequences of the BDBN. 

The Court formed the view that the BDBN was not complex and that it did not matter whether Dr Nespolon had understood the legal consequences, only that he would have been capable of understanding those consequences had they been explained to him. 

One of factors that weighed heavily in the Court forming this view was Dr Nespolon’s general level of sophistication including that he was “educated in business as well as medicine, a director of various companies and experienced in dealing with his financial affairs and businesses”. 


This case emphasizes how the court determines the ability of a person to comprehend a document or matter if it is explained rather than actual understanding.

A timely reminder:

  1. All advisors should maintain good and thorough records of explanations provided to clients; and
  2. For clients to check their BDBN’s are up to date, reflect their current intentions and do not contradict their Will.

Reform to the superannuation death benefit framework may be on its way

The Law Council of Australia has provided a submission to the Treasurer proposing reform to the superannuation death benefits framework which they say will simplify and improve the framework.  An extract from the Law Council website on their views of the proposal is extracted below:

“In the Law Council’s view, the proposal would:

  • provide greater certainty and autonomy for all members of superannuation funds in their succession planning;
  • be consistent with key rule of law principles, by:
    • providing a clear, consistent and statutorily authorised means to distribute superannuation death benefits;
    • determining disputes about distribution through judicial processes, applying settled principles; and
  • significantly reduce delays in the provision of superannuation death benefits. Proposed reform to superannuation death benefits.”