Brian Hor from Townsends law discusses a classic ‘Super Family Feud’ case where three children were in a dispute over their father’s super death benefit, which could all have been avoided with a valid binding death benefit nomination.
In Stock (as Executor of the Will of Mandie, Deceased) v N.M. Superannuation Proprietary Limited [2015] FCA 612, the deceased was a member of a public offer superfund. He was survived by his three adult children. As such, each of the children qualified as being a “dependant” under the terms of the trust deed for the superfund. The trust deed for the fund also allowed for the making of a BDBN, but the deceased had not done so.
The trustee of the fund decided to pay each of the adult children a third of the death benefits payable from the fund. However, one of the three children, his daughter, who was one of the executors of her father’s estate, sought to challenge this decision on the basis that the trustee should have instead paid all the death benefits to the legal personal representatives of her father’s estate. Under the father’s Will, the daughter would have received the bulk of the death benefits, with none of it going to her two brothers.
There was also evidence presented that the father had previously provided for his sons under a settlement agreement, and therefore presumably he intended that his daughter should be the main beneficiary of his super.
However, the trustee submitted that normally it would not pay a death benefit to the estate unless there are no dependants, or if there were such a direction in a binding death benefit nomination. Therefore the trustee was simply following its usual procedure in making its decision.
In the end, both the Superannuation Complaints Tribunal at first instance and the Federal Court of Australia on appeal held that the decision reached by the Trustee was fair and reasonable in the circumstances.
This expensive legal fight between siblings could have been avoided if the father had made a valid BDBN regarding his wishes!
An even better strategy might have been for the father to actually roll out his super into a single member SMSF with a corporate trustee where he was sole director and shareholder, and making a non-lapsing BDBN to his estate, so that on his death his daughter and her co-executors would take control over the corporate trustee to make sure the super death benefits went to his estate.
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Brian Hor
Special Counsel – Estate Planning & Superannuation
Townsends Business & Corporate Lawyers
02) 8296-6203 0401 122 338
Twitter: @TownsendsLaw
brian@townsendslaw.com.au
townsendslaw.com.au