Estate Disputes: Superannuation
Not every asset is considered part of a deceased’s Estate. Instead there are ‘Estate assets’ which are covered by a Will and ‘Non-Estate assets’ which are not. Knowing which assets are Estate-or Non-Estate not only helps the will-maker undertake the best estate planning possible, but also the will-disputer determine whether they have an adequate claim.
Superannuation: Estate or Non-Estate asset?
Superannuation funds act as separate legal entities and do not automatically form part of the deceased’s Estate. Hence, superannuation is considered a non-estate asset. As a result, superannuation monies are tied to the nominated superfund which has a Trustee who decides on payments.
So who gets the money?
Most superannuation funds allow you to make a binding nomination. This allows you to nominate where your super goes if you pass away. As the name suggests, this is binding, so the super fund must follow your instructions and the Trustee does not have any discretion as to where payment is to go.
Traditionally, people nominate their spouse or children. You can also nominate a combination, each with a different percentage if you wish to do so.
A non-binding nomination has no expiry date and never needs renewing.
This is exactly the same as a binding nomination except that your super fund is not forced to follow your instructions, the instructions are simply taken into consideration by the Trustee when they make their distribution.
This is particularly useful if someone has re-partnered and forgotten to remove their ex-partner from their super benefit. If they were listed as a binding nomination, the new partner would be forced to try and dispute the distribution, however if they were just listed as a non-binding nomination, the trustee is only required to take the instruction into account.
A non-binding nomination must be properly documented and renewed every 3 years for it to remain valid.
No Binding Nomination
Without a binding death nomination in place, the superannuation fund Trustee is required to distribute the super death benefit at their discretion. They do this in accordance with a set of trust deed rules and is guided by: Any non-binding nominations made, the number of dependents, the relationship between the member and each of their dependents, the level of dependency between the member and each dependent, and what is outlined in the member’s Will.
Can super ever form part of the Estate?
The only time super can form part of the Estate is if the member chooses to make a binding nomination to a legal representative of the Estate – that is, the Executor of the Estate. In this case, upon death the super fund is bound to pay the super into their Estate which in effect transforms it from a Non-Estate asset to an Estate asset.
However, the important thing to note is that by default, superannuation will always be a Non-Estate asset.
Can the distribution be disputed?
Distributions can be disputed but there is a time limit. Complaints must be made for internal review within 28 days of being notified of the superannuation distribution. If the fund only had a non-binding nomination, you would be required to explain the reasons why you believe the decision made by the superannuation fund was wrong, and provide supporting documents to prove relationship and or dependency on the deceased. Ie, reasons why you need maintenance and support more so than the person(s) the Trustee paid it out to.
In cases where a binding-nomination is present, you are still able to dispute the distribution, but you would be arguing that at that time, the ‘binding’ nomination was not in fact ‘binding’ on the Trustee and therefore the trustee should use their discretion; i.e. the nomination was not executed effectively. It is substantially more difficult to be successful in this kind of dispute.
If still not happy with the decision of the fund, you then may apply to the Superannuation Complaints Tribunal within 28 days.
If the complaint cannot be resolved, the tribunal will consider the relevant evidence of the parties at a review meeting and you may appeal the decision of the tribunal to the Federal Court within 28 days of the decision.
Once the death benefit has been paid, it is very difficult to make any application or claim in respect of the monies. Therefore, if you have concerns in relation to, or wish to make a claim against a deceased’s person’s superannuation, do not hesitate to contact the team at Hentys Lawyers today. At Hentys we can also help you Defend and Challenge the Will.
Alternatively, if you have any queries, our Estate Dispute FAQs are a great place to start.