The Mandie case: Superannuation is not part of your will

The Mandie Case: Superannuation is not part of your will

The Mandie case: Superannuation is not part of your will

The June 2015 Federal Court decision in Stock (as Executor of the Will of Mandie, Deceased) v N.M. Superannuation Proprietary Limited  (“The Mandie Case”) highlights the importance of making a binding death benefit nomination in order to have your superannuation benefits distributed according to your wishes after you pass away.

Background

John Mandie died in 2011 with an estimated wealth of approximately $289 million. At the time of his death, Mandie’s superannuation policy listed his spouse as his beneficiary. However his spouse had predeceased him and he did not nominate any other beneficiary.

Nor did he make a binding death benefit nomination. This is a written direction to the trustee of the superannuation fund detailing how the superannuation funds are to be paid upon the member’s death. The nomination generally remains in effect for three years from the date of signing. If it is valid, the trustee must comply with the nomination.

The trust deed of Mandie’s superannuation fund stated that in the absence of a binding death benefit nomination, the superannuation benefits must be paid out to Mandie’s dependants or his Legal Personal Representative.

Mandie’s two sons and daughter were detailed in his super fund as his dependants. There was no stipulated Legal Personal Representative. Accordingly, the trustee determined that Mandie’s fund benefits were to be distributed equally among Mandie’s three children.

The case

Mandie’s daughter disputed the trustee’s determination on the grounds that Mandie’s sons had been removed from Mandie’s will. Specifically, following a falling-out over the family business, a settlement had been agreed between Mandie and his sons which stated that his sons were not to receive any entitlements from Mandie’s estate.

While the settlement agreement did not specifically refer to Mandie’s superannuation benefits, his daughter argued that it nonetheless implied that the sons were not to receive any of the superannuation benefits. She argued that Mandie’s wish was to exclude his sons from all entitlements including superannuation benefits.

The trustee responded that without a binding death benefit nomination the benefits from Mandie’s superannuation fund had to be paid out according to the trust deed. And in this case the trust deed stated that the benefits were to be paid to the beneficiaries, being all three children.

The outcome

The court held that Mandie’s superannuation was not an asset of his estate and therefore the trustee of the super fund did not have to follow directions relating to Mandie’s will. Instead, the trustee has the power to decide in a fair and reasonable way how to distribute the benefits unless a binding death benefit nomination had been made, and in this case it had not.

Further, while the trustee could take Mandie’s wishes into account, the trustee was not required to resolve any perceived or real issues in the Mandie’s estate.

Lessons learned

This case shows that superannuation benefits do not form part of your estate and therefore it is important to make appropriate arrangements for your superannuation benefits when you undertake estate planning.

In particular, it is important to make a valid, up-to-date binding death benefit nomination for your superannuation in order to have certainty over who will receive your superannuation benefits.

As with all areas of estate planning and will drafting, matters can become complex very quickly and seemingly minor oversights can have very large unintended consequences down the track. To get advice from expert estate planning lawyers, please call Certus Legal Group on 07 3106 3016 or contact us using the form on this page.

This article does not give legal advice and should not be relied upon as such. It is intended to provide general and summary information on legal topics, current at the time of first publication. You should seek professional legal advice before acting or relying on any of the content contained herein.

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