Estate planning and superannuation

Superannuation is a critical pillar of Australia’s retirement income system. The Treasury Department considers that by 2018 it will be the most critical – estimating that age retirement benefits will exceed age pension outlays. Whether superannuation is held through a self managed fund, an industry fund or a retail fund, it is a critical part of a family’s wealth – monies invested in superannuation are today worth about $1.5 trillion, roughly the same as our GDP, with that number exponentially increasing.

Superannuation is, however, all too often overlooked by people when they are considering their estate plan. People often simply assume that their superannuation entitlements will form part of their estate and will be paid out in accordance with their will. This is not the case. The failure to properly consider how to treat superannuation entitlements can have disastrous consequences from a taxation and estate planning perspective.

A recent decision in Queensland highlighted how things can go wrong. In the matter of McIntosh v McIntosh [2014] QSC 99, the court found that the administrator of a deceased estate had breached her fiduciary duties when dealing with the deceased’s superannuation entitlements when she applied to the superannuation funds’ trustees to pay benefits to her directly. In that case, the deceased had died without a will and without making binding death benefit nominations. The deceased died at 40 and had no wife or children, and had lived with his mother for most of his life, as he suffered from a number of illnesses. His mother and father had separated when he was very young, but both survived him. The deceased had a relatively modest estate of about $80,000.00, but had more substantial superannuation benefits (about $450,000.00). After he died, the mother was appointed administrator of his estate, which was to be paid to the mother and father in accordance with the rules of intestacy. The mother claimed the superannuation entitlements directly (as the deceased had made a non binding nomination in her favour), however the court found that she had a fiduciary duty as administrator of the estate to seek that the superannuation entitlements be paid into the estate. The court found that a conflict of interest arises when a legal personal representative is the sole beneficiary under a non-binding superannuation nomination.

There are a wide range of tools available to ensure that an effective estate plan is put in place. Rarely is a simple will enough, particularly in complex circumstances – be they a blended family, a valuable estate, large superannuation entitlements or a family dispute. A proper estate plan may contemplate a range of tools to ensure that a testator’s wishes are met as effectively as possible.

Whether it is testamentary trusts, binding death nominations, memoranda of wishes, enduring powers of attorney or guardianship guidelines, the Ballantyne Law Group is able to work with you and your advisors to ensure that you have an effective estate plan in place.

Please contact us on (07) 5606 7332 to discuss your estate planning needs. Talk to one of our estate and will lawyers today.

Ballantyne Law Group was established by solicitor and principal James Ballantyne in 2014. Contact us if you are looking for: