Blended families and BDBNs

You want your current spouse looked after, and you want the children from your first relationship to inherit. Super is often the largest asset — but a BDBN to your spouse gives them the money outright, with no legal obligation to pass anything on to your children later. A BDBN split between spouse and children can leave your spouse under-funded. And children of your spouse from a prior relationship (i.e. your step-children) are still your SIS dependants — which can produce results you didn't intend.

1. Split BDBN. Nominate percentages directly — e.g. 60% spouse, 20% each to two children from a first marriage. Simple, transparent, and each recipient's tax position is their own. Works when the amounts each side receives are genuinely enough.

2. BDBN to legal personal representative + testamentary trust. Direct the whole super benefit into your estate, then have your will pour it into a testamentary trust that provides for your spouse during their lifetime and passes the remaining capital to your children on their death. Powerful and flexible, but adds tax on the taxable component if a non-tax-dependant benefits, and requires a solicitor to draft properly.

3. Split by fund. Some people run two super accounts on purpose: one with a BDBN to the spouse, one with a BDBN to the children. Administratively clean. Watch total fees.

• A BDBN to "my children" (unnamed) will only bind if the fund allows a class nomination. Many require named individuals.
• Your first spouse, once divorced, is not a SIS dependant. A BDBN in their favour is invalid.
• Your current spouse's biological children who never lived with you are still your step-children under s 10 while your marriage subsists. Some funds will interpret an unspecified "children" nomination to include them.
• A binding lapsing BDBN written before a divorce or new marriage should be re-executed, not just left in place.

If your super and insurance in super together exceed roughly $500,000, or the family structure has any layer of complexity (children from more than one relationship, a former spouse still receiving support, an SMSF), the cost of a solicitor and a licensed adviser is a rounding error next to what a contested death benefit distribution costs.