Hypothetical by Manny Wood published in the Coffs Coast News Of The Area on 29 January 2021.
Mary establishes a self-managed superannuation fund and as the sole member of the fund, appoints herself as sole director and shareholder of a company that becomes the trustee of the fund.
Mary’s superannuation fund consists of shares and cash totalling $1 million.
Mary makes a will valid appointing her daughter, Kate as her executor. The will states that her superannuation is to be shared equally between Kate and Mary’s only other child, Greg.
Mary does not execute a binding death benefit nomination in relation to her self-managed fund.
When Mary passes away, Kate seeks advice regarding her role as executor and the distribution of Mary’s superannuation.
Kate is advised that as executor, she can become the sole director of the company controlling the superannuation fund. She is also advised that the reference in Mary’s will regarding the distribution of superannuation is not binding and that as director, she has the ability to make her own decision regarding the distribution of the superannuation.
Kate and Greg’s relationship deteriorated many years ago and Kate decides to pay herself the whole of Mary’s superannuation.
Greg files a complaint with the Australian Financial Complaints Authority (AFCA), formerly known as the Superannuation Complaints Tribunal but is advised that AFCA does not have jurisdiction to hear his complaint.
Greg seeks legal advice and is informed that in the absence of evidence regarding undue influence or a lack of testamentary capacity, the duly executed will is unable to be challenged.
Greg is further advised that as a child of the deceased, he has standing to make a family provision claim in the Supreme Court, clawing-back the superannuation into Mary’s estate but that he would need to demonstrate that he has sufficient financial needs to be successful. Greg has 12 months from Mary’s date of death to make a claim.
If YOU would like a particular issue addressed please email Manny at manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
