A recent decision of the NSW Supreme Court highlights the importance of receiving comprehensive estate planning advice to ensure you are aware of the circumstances surrounding the distribution of superannuation upon your death.
Superannuation does not typically form part of a deceased estate and is often not subject to the terms of a will. A binding death benefit nomination can be put in place to direct the trustee of your superannuation fund to make payment of your superannuation in accordance with your wishes. Despite the death benefit nomination being ‘binding’ on the trustee, section 63 of the Succession Act 2006(NSW) (“the Act”) allows the Court to treat property that does not form part of a deceased estate as notionally part of the estate in certain circumstances. The recent decision of Benz v Armstrong  NSWSC 534 (“Benz”) applies section 63 of the Act.
In Benz, the deceased was survived by his six children from his first marriage and Erlita, his spouse from his second marriage. The deceased executed a binding death benefit to Erlita of his superannuation held in a self managed superannuation fund, totalling $12,913,476.00. The deceased’s residuary estate after all bequests were made under the will, totalled $201,060.00. Three of the deceased’s children brought a family provision claim, claiming their provision of one sixth of the residuary estate was inadequate for their proper maintenance and advancement in life. While the Court dealt with many issues in the proceedings, Justice Ward ordered that an amount of $3,700,000.00 be paid to the three children in various shares from the deceased’s superannuation.
Where there is a risk of a family provision claim on a deceased estate, we can advise clients in relation to such risks and how such risks can be mitigated. Our experienced estate planning team can advise you on all aspects of your estate plan including advising on superannuation in both managed and self managed superannuation funds. Our team can be contacted on (02) 9521 6000.