“However, where you have blended families or unique relationships existing within families, that's when you need to start to build cascading arrangements, whether they incorporate the nomination part or the pension part.”

Aaron Dunn, chief executive of Smarter SMSF, said when setting up a fund, there were often templates available that followed the deed.

“The High Court decision in Hill vs Zuda affirms the fact that you follow the deed in respect to BDBNs,” he said.

“However, it’s also important to make sure people know what they're preparing and therefore how it links to their broader estate planning becomes quite crucial. Just filling out a binding death benefit nomination may end up resulting in a situation whereby the trustee is bound by a decision that doesn't necessarily tie up with some of the outcomes that they wanted in the first place.”

The same could be said when contemplating reversionary pensions.

“There’s the old saying that never the twain shall meet with reversionary pensions versus binding death benefit nominations,” Miller said.

“The simple thing of ‘I want to start a pension’, but not going through it too significantly, you may end up with a reversionary pension that is counter-intuitive to a binding nomination that was previously made. When the member is not there to deal with it, there may be a few angry family members around.”

Dunn said it is essential that when making BDBNs that there are different tiers of that nomination structure.

“In a lot of instances, we might just see John Citizen who wants it to go to Jane.”

“However, does the BDN deal with the cascading nature of what may happen? We may want to have a specific set of instructions for one to pass to the other, but if that first individual dies, or if we don't have that second instruction, it can lead to a situation where the trustees who are remaining, or who have come in, would then have a level of discretion in how they would need to deal with the benefits.”

Miller said while the deed is critical for BDBNs, it was also essential that they are regularly reviewed and updated, similar to investment strategies.

“You should be reviewing your nominations at least annually, as well as reviewing the fund’s processes to make sure the deed still satisfies members’ requirements.”