The importance of Superannuation Trustees

Yesterday for the umpteenth time I posted that you should make a Will.

As I’ve posted before a Will is a planning document to be updated throughout your life as your circumstances change. You should also consider the level of insurances that you have to cover loss of income, and a life policy to ensure that your loved ones are cared for.

Importantly you need to be aware of the assets that can be disposed of by a will: property held as tenants-in-common; assets owned by you personally: a bank account, or a car; life insurance proceeds (where the estate is specifically mentioned as being the beneficiary).

Importantly your Superannuation is not an estate asset unless you have stipulated in a binding nomination that it is to go to your estate.

Christopher Webb married Kim Birchell in 1981. Their daughter, and only child Rebecca, was born in 1984.

Christopher joined a Superannuation Fund in February 1988.

Christopher and Kim separated in 1994 but never divorced nor did they divide their assets. Including retaining joint tenancies over both their family home and a holiday home.

Christopher started a relationship with Jill Teeling in 1997.

In February 2000 Christopher nominated that 25% of the Superannuation death benefit go to Kim, 25% to his mother, Olive, and 50% to his daughter, Rebecca.

Superannuation funds are governed by the individual funds trust deed and in this case Christopher’s nomination was not binding on the trustee, who had the absolute discretion to pay the benefit to or for the benefit of Christopher’s dependents as it thought fit.

In August 2006 Christopher died. As he still held the properties with Kim in Joint tenancy, by right of survivorship she automatically became the sole owner of the family home and the holiday home.

The trustee of the Superannuation fund apportioned Christopher’s death benefit as follows:

  • $250,000.00 to OLIVE MAY WEBB, the deceased’s mother;
  • $547,712.00 to KIM LORRAINE WEBB, nee BIRCHELL, the deceased’s widow;
  • $100,000.00 to JILL TEELING as a financial dependant; and
  • $1,293,137.00 to REBECCA LOUISE WEBB, the deceased’s daughter.

Jill requested that the trustee reconsider submitting she should be accepted as Christopher’s de facto partner and that adequate provision should be made for her from the fund.

As part of her submission Jill’s solicitors submitted that the allocation to Kim was grossly unfair, particularly having regard to her ownership of the family home and the holiday home and her long estrangement from Christopher. The Trustees dismissed these objections and confirmed its preliminary determination.

Jill appealed to the Superannuation Complaints Tribunal that she was not satisfied with the trustee’s failure to recognise her as a financial dependant and her future loss as Christopher’s de facto partner.

Jill claimed that the apportionment was unfair and sought a greater share of the fund as it did not adequately provide for her future financial security. She complained about the apportionment to Christopher’s wife, Kim, and as Christopher’s Mother Olive had died by the time the determination was confirmed, to the estate of his mother.

The Tribunal set aside the trustee’s decision and substituted its own decision distributing the fund as follows:

  • 52% to Kim Webb ($1,139,241),
  • 26% to Rebecca Webb ($569,620) and
  • 22% to Jill Teeling ($481,987).

The estate of Olive Webb received no benefit from the fund.

An appeal by Christopher’s daughter to the federal court was dismissed.

Most of us have had money put into a superannuation fund. Importantly each fund has its own trust deed. So check with your fund to see if your death benefit nomination is binding and if it isn’t how it will be divided in the event of your death.

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