In a decision from 2015 (Munro v Munro  QSC 61), the Queensland Supreme Court held that a superannuation death benefit nomination that Mr Munro (the deceased) intended to be binding on the trustee of his self-managed superannuation fund to ensure that his superannuation death benefit was paid to his estate after his death, was not actually binding.
Mr Munro established a self managed superannuation fund with his second wife, Suzie, in 2009 and shortly after, prepared what he thought to be a binding death benefit nomination which nominated the “Trustee of Deceased Estate” to receive his benefit upon his death.
Mr Munro then prepared a Will, which directed $350,000 of the superannuation benefit that was to be paid to his Estate to Suzie, if she survived him, and the remainder to his two daughters from his first marriage equally. At the time of his death in 2011, Mr Munro had minimal other assets to form part of his Estate.
After Mr Munro’s death, his second wife (as trustee of the superannuation fund) asserted that the binding death benefit nomination was not actually binding on her because it did not comply with the specific terms and requirements of the governing superannuation fund trust deed and as a result, she was entitled to exercise her discretion as trustee to pay all of the benefit to herself, as the surviving spouse (which the governing trust deed allowed her to do, if there was no valid binding nomination in place).
Mr Munro’s daughters made an application to the Court seeking orders that the binding nomination was valid, but unfortunately, they were not successful.
This is because Mr Munro’s nomination form nominated “Trustee of Deceased Estate” to receive his benefit in circumstances where the relevant trust deed and the nomination form itself provided that if a member wanted to nominate their Estate to receive their death benefit when they died, they must specifically nominate their “Legal Personal Representative” on the form. Further, relevant superannuation legislation provides that only a person’s legal personal representative, spouse, a child or an interdependent are eligible to receive their superannuation and death benefit when they die. A trustee appointed under their Will (for example, a trustee of a testamentary trust) is not eligible.
Although the terms of ‘legal personal representative’ and ‘trustee’ are sometimes interchanged, they can represent and perform very different roles in a deceased Estate. Therefore, by nominating “Trustee of Deceased Estate” instead of “Legal Personal Representative” Mr Munro did not comply with the terms of the relevant trust deed or superannuation legislation.
The effect of this decision (if it is not successfully appealed by Mr Munro’s daughters) is that Mr Munro’s second wife is able to pay all of his superannuation death benefits to herself, instead of the benefits being shared between her and Mr Munro’s daughters, as he intended. As there are very minimal assets in Mr Munro’s Estate it seems that his daughters will inherit very little, if anything at all.
This case serves as an important reminder to seek appropriate legal advice in relation to not only your Will, but a comprehensive estate plan to appropriately deal with all of your assets when you die.
Contact us for advice in relation to your estate planning or estate disputes.
This article was posted by the Bennett & Philp marketing team on behalf of the Estate Litigation practice group. The article was authored by a former team member while they were under the employ of Bennett & Philp Lawyers. Final revisions were made by a Director in charge prior to publishing.
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