Appropriate Legal Advice is a must!!
Why it is important to get the appropriate legal advice on your Nominations to ensure that your intended beneficiary receives your superannuation on your death.
In the recent case of Munro & Anor v Munro & Anor[1] the Queensland Supreme Court declared that a document purporting to be a binding nomination for a self managed superannuation fund was not binding on the Trustees of the fund due to a minor error.
Details of the dispute
The Self Managed Superannuation Fund, between Mr Munro (a solicitor) and his wife, was called The Barrie and Suzie Super Fund and was established in July 2004.
On 22 September 2009 Mr Munro signed a printed form entitled “Binding death benefit nomination” that had his name and particulars written on the form, but in the section of the form that allowed for the specification of the nominated beneficiary, the name of the beneficiary had been typed in as “Trustee of Deceased Estate” and the percentage of benefit to be received was designated as “100%”. The relationship of the nominated beneficiary was shown as “Trustee”. The section of the form that contained the details of the nominated beneficiary contained this instruction:
“Each nominated beneficiary must be your spouse (legal or de facto), child (including adopted or step-children), financial dependant, interdependent or the executor of your estate (as stated in your will). When you nominate your executor you should enter legal personal representative in the relation column.”
Was the binding death nomination valid?
Upon Mr Munro’s death in August 2011 Mr Munro’s daughter was appointed as Co-trustee of the Fund. The Trustees decided to pay the benefit to Mrs Munro stating that the Binding Death Nomination was not valid. Mr Munro’s two other daughters as Executors of Mr Munro’s estate applied to the Court for a declaration that the document signed by Mr Munro was a binding death benefit nomination pursuant to the trust deed.
Her honour emphasised that although colloquially the term “executor” may be used interchangeably with the term “trustee”, the roles are distinct.[2]
An executor holds the property of a deceased for the purpose of carrying out the functions and duties of the administration of the estate, but upon the completion of those administration duties the assets then may be applied to the trusts under the will. The same person who was executor may become the trustee of the deceased estate, when the administration duties of collecting in the assets, paying the debts of the deceased and the administration expenses and setting the assets aside to give effect to the gifts in the will have been completed.
Justice Mullins found that the document was not binding as it did not meet the requirements of the SMSF deed or Superannuation Industry (Supervision) Act 1993 (SIS Act).
Therefore the Trustees of the fund could pay the deceased’s death benefit to Mrs Munro.
Value of appropriate legal advice for Estate Planning
This case serves as a reminder to the public of the value of the appropriate legal advice for estate planning. For further information on Binding Death Nominations or Estate Planning please contact Jenna Hutchinson of Turner Freeman Lawyers Wills and Estates Team on (07) 3025 9000.
——————————————————————
[1]Munro & Anor v Munro & Anor [2015] QSC 61
[2]Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12,17-18.