Article of Interest on Wills & Estates

BEWARE THE SUPERANNUATION FUND

James had a superannuation death benefit entitlement of $500,000.00 in a superannuation fund. He was separated from his wife but not divorced. He wanted his 2 children to benefit from his superannuation death benefit. James nominated them as beneficiaries of the superannuation fund by way of a binding nomination.

James reviewed his Will with his Lawyer. The Lawyer did not think to enquire about James’ superannuation entitlements. Unsupervised, James had filled out the binding death benefit nomination himself and 2 friends witnessed it.

One of the witnesses to James’ binding nomination had completed her date of birth on the form incorrectly. The mistake made by the witness was a simple, obvious error. After James died the binding nomination was deemed to be invalid as the witness had incorrectly completed the form.

The result of the invalidity was the whole of the superannuation death benefit entitlement was paid to James’ wife. James’ wife had re-partnered and had a massive falling out with her 2 children. No benefit flowed from James’ superannuation to James’ children. James’ superannuation death benefits were now used by his wife and her new partner.

This was a simple error which occurred because of two serious mistakes:
1. James completed the binding nomination form unsupervised; and,
2. The estate planning Lawyer did not raise the issue of the binding death benefit nomination with James.

A binding direction to a trustee of a super fund as to where superannuation death benefits are to be paid needs to be activated. The effect of making an invalid death benefit nomination will result in superannuation benefits being distributed to those you may not wish to benefit.

The unfortunate reality is that you are not in a position to protest when the invalidity is discovered and leads to an unintended distribution.

Any review of a Will should also review death benefit nominations in relation to superannuation entitlements.

The completion of binding death benefit nominations is a tricky business. The form looks simple, but isn’t.

Estate planning is a package. Everything in the package must be carefully examined.

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