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Another Reason To Have A Will

Jul 21, 2014

There are many reasons to ensure you have a valid Will in place, however a recent case in the Supreme Court of Queensland provided an important example of why you should sooner rather than later.

The Case Study

The parties to the case were the father and mother of a son who had passed away at 39 years of age. The parents had divorced when their son was approximately seven years of age and there had been a high level of conflict between them and their relationship continued to be acrimonious.

The son did not have a Will, he had no spouse and no children. He had net assets in his Estate of approximately $80,000 but had in excess of $450,000 in superannuation benefits (mainly death benefits) in three separate superannuation funds. The mother obtained Letters of Administration from the Supreme Court which entitled her to administer the Estate in accordance with the laws of intestacy. However, she did not treat the superannuation funds as Estate funds but instead applied to have them paid out by each of the trustees of the three superannuation funds directly to her.

Superannuation & Estate Administration

You may not be aware that superannuation funds do not automatically form part of a person’s Estate.

There are a number of ways that superannuation funds can be dealt with, including the making of binding nominations by the member or the making of non-binding nominations. Where no binding nominations are made there is a discretion in the fund's trustees which can enable them to pay the superannuation to either the member’s legal personal representative (ie. their executor or the person who has been granted Letters of Administration) or to one or more of the member’s dependants.

Dependants include the spouse of the member, any child of the member or any person with whom the member has an interdependency relationship. The superannuation legislation provides that two persons have an interdependency relationship if:

  • they have a close personal relationship; and
  • they live together; and
  • one or each of them provides the other with financial support; and
  • one or each of them provides the other with domestic support and personal care.

The son lived with the mother and she applied to each of the three superannuation funds (without notifying the father) on the basis that she was in an interdependency relationship with her son and as such was a dependent. Ultimately each of the superannuation trustees paid the superannuation funds to the mother.

What about other parties involved?

The father was obviously unimpressed with what had occurred and the matter ultimately proceeded to a trial in the Supreme Court. The main issue which the Court was required to determine was whether or not the mother, who had taken the role as administrator of the Estate was under an obligation to maximise the Estate assets. An administrator has a number of fiduciary duties which include that they must act in good faith and they must not place themselves in a position where their duty and their own interest may conflict. The Court decided in this instance there was a clear conflict of duty between the duty owed by the mother in her role as the administrator to the Estate versus her own personal interest in attempting to recover the superannuation funds for herself. She had failed to act in the best interest of the Estate and as a result the Court ordered that she account to the Estate for the superannuation funds (i.e. the approximately $450,000) which had been paid to her.

Given the growth of personal superannuation and the large amount of money which is now tied up in superannuation along with the death benefits that are quite often paid from someone’s superannuation there is all the more reason to ensure an individual has in place a valid Will and also gives consideration to superannuation and how it should be dealt with upon their death.

If you are facing an Estate Dispute or you believe you may have a claim on an Estate, contact our team of experienced solicitors on the Gold Coast.