The discretion of the trustee of a superannuation fund to choose the recipient of a death benefit is a core principle of estate planning, particularly where the benefits are in a self-managed superannuation fund.
But the Queensland case of McIntosh v McIntosh [2014] QSC 99 has called this into question.
James McIntosh died with no will, spouse or children, and $450,000 in death benefits in retail superannuation funds.
His mother Elizabeth was appointed administrator of his estate and separately claimed the superannuation for herself. The trustees of the fund agreed to pay all James’ superannuation benefits to her on the basis she was in an interdependency relationship with James.
James’ father, John, challenged Elizabeth’s right to claim the funds for herself and argued she had a conflict as the administrator of James’ estate. In that capacity, he argued, her duty was to claim the superannuation for the estate (where John was entitled to half).
The Queensland Supreme Court agreed with the conflict argument, and ordered Elizabeth to pay the superannuation she had received to the estate, where it would be divided equally between her and John.
As a result of this decision, advisers should be cautious where a person who may wish to be considered as a beneficiary of superannuation benefits is involved with making the decision, or may be the executor or administrator of the estate. There are a variety of steps advisers can take to ensure benefits are paid as intended despite conflicts that may occur.
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