I firmly believe that the answer is yes: once fully informed, advisers do want a deed that overrides any pension documentation. I will now explain why.

Sometimes adviser think they want pension documentation that overrides a BDBN. They think using such documentation will allow them to make a BDBN in favour of the client’s estate and also pension documentation that says upon death the pension reverts to a spouse. They think this allows them to easily implement a ‘bifurcated’ SMSF succession planning strategy. However, what they have actually done is caused problems.

One problem is that the adviser is probably engaging in legal practice, which of course only a lawyer should engage in.

Secondly, when the executor of the estate sees a BDBN that says all SMSF benefits to the estate, but the estate does not receive all the SMSF benefits, there is a real risk that the executor might challenge the SMSF.

Thirdly, a much simpler solution is available: make a BDBN that acknowledges the situation. The BDBN could say that yes, the pension does revert, and any SMSF accumulation interest upon death goes to the estate. Naturally such a BDBN should be drafted by a lawyer. (And honestly, I think that is why certain accountants and financial planner don’t want to implement this solution — they don’t want to encourage their client to engage a lawyer to draft such a document, which I feel is simply being penny wise pound foolish.)

So, that was the main reason why advisers think they want pension documentation that overrides a BDBN and why I think that that reason doesn’t really stack up.

So why is it good for a BDBN to override a pension?

Well, here’s one reason (there are many more). Consider a pension that is commenced without much consideration to succession planning. A few years into the pension, the pensioner decides it would be best if that pension automatically reverted upon death to the pensioner’s spouse. If the:

• SMSF’s deed allows the BDBN to override the pension;

• SMSF’s deed allows the BDBN to make the pension reversionary ‘mid-stream’; and

• the SMSF’s deed comes with a template BDBN with an option that says words to the effect of ‘tick here to ensure that any account-based pension being received is not just paid to the nominated beneficiary but is paid to that beneficiary by way of that pension automatically reverting upon my death’

then it is very easy — and cost efficient — to implement the SMSF member’s wish.