Many people are not aware that a person’s superannuation is not an asset of that person’s estate when he or she dies. Upon the death of the superannuation fund member, the fund will pay a death benefit, which can be a considerable amount of money, to either a person nominated by the deceased, to the estate of the deceased or to a dependant of the deceased. The Will of the deceased cannot override the nomination made by the deceased or the decision of the trustee of the super fund.
In the case of Wan v BT Funds Management Limited [2022] FCA 302 in the Federal Court of Australia, the trustee of super fund decided to pay a death benefit of $881,111.00 to the estate of a deceased member rather than a woman who was a dependant of his. She argued that there is a universal policy that trustees of super funds should favour dependants over an estate when deciding on the payment of a death benefit.
The Court rejected the existence of the principle that dependants should be favoured and stated the trustee of the super fund was entitled to take into account the fact that the woman was already a substantial beneficiary under the deceased’s Will. As a result, the trustee’s decision was considered to be fair and reasonable.
So, when planning your future affairs, please take into account that your Will does not cover all of your earthly assets! The superannuation regime exists outside of your estate and you have to decide whether:
(a) you would like to nominate a beneficiary to receive your death benefit;
(b) you would like your death benefit paid to your estate; or
(c) you would like to leave it to the super fund trustee to decide.
October 2022