Who gets your superannuation?
By Andrea Olsson, Senior Associate, MST Lawyers
The Australian Prudential Regulation Authority (“APRA”) estimates that as at 31 March 2014 Australians hold assets of $1.4 trillion in superannuation funds. APRA anticipates that the superannuation asset pool will increase to $4 trillion dollars within a decade. Many clients are not aware that superannuation does not automatically form part of your estate.
The Superannuation Industry (Supervision) Act 1993 (Cth) restricts the possible recipients of superannuation death benefits to the deceased members estate (via their legal personal representative) or to the dependants of the deceased. Some superannuation trust deeds stipulate where the death benefit must be paid, for example, to your estate or specifically to a dependant.
As the following cases illustrate, the right documentation is required to ensure your superannuation passes to those you wish to benefit.
In Ioppolo and Hesford v Conti 2013 [WASC 389] a mother died with superannuation benefits in a self-managed super fund of $648,586. She was survived by four children from her first marriage and a husband from a second marriage. Her Will gifted the superannuation entitlements to her four children. She specifically did not want the entitlement paid to her second husband.
Her husband was the only surviving member and Trustee of the superannuation fund. The Trust Deed gave discretion to the Trustee to pay the death benefit to a spouse, child or dependant in the absence of a binding nomination. Despite the wording of the Will, the husband was able to exercise the discretion and pay the superannuation to himself and not to the deceased’s children. The four children challenged their step-father to recover the superannuation funds. The children were unsuccessful in their claim as the Court found Trustees of superannuation funds were not bound to take into account the deceased’s gift in the Will to her children.
In the case of MacIntosh v MacIntosh [2004] (QSC 99), a couple had been divorced for 34 years. Their son died at the age of 41 years. The son had been living with his mother at the time of his death. The son left an estate valued at $80,000 and superannuation held in three funds valued at approximately $453,000. As the son had not made a Will, the mother applied for Letters of Administration to administer his estate. The son had made a non-binding nomination in favour of his mother. The Trustee of the superannuation fund had paid the funds to the mother as a dependant. The father challenged this decision on the basis as the mother was the administrator of the estate, the mother should not benefit from the superannuation fund. The Court ordered the mother to pay the superannuation entitlements to the estate. The Court commented that if the son had a Will this order would not have been made.
It is important to seek advice to ensure your superannuation funds and your other assets are transferred to those you wish to benefit.
For further information on superannuation death benefits contact our Wills and Estates Team by email wills-estates@mst.com.au or by telephone +61 3 8540 0200.
