• Safe Super

    Posted on February 11, 2014 at 10:42 am under Family Law category.

    Superannuation is an important aspect of every Australian worker`s financial situation, and often accounts for a fair amount of his or her individual wealth. Superannuation is not an estate asset however, and will not be dealt with by your will unless you have made specific provisions for your superannuation to be paid into your estate. This is done through a binding death nomination if your super fund will accept a binding death nomination.

    Failure to make a binding death nomination, or to keep it up to date, allows the trustee of your superannuation fund discretion in the distribution of your superannuation. Some super funds require a binding death nomination to be made every 3 years.

    In a recent Western Australian Supreme Court decision, we are shown the very real, and very costly consequences of failing to maintain a valid binding death nomination.

    The Case of Ioppolo & Hesford v Conti.

    Mr. and Mrs. Conti were both the trustees and sole members of their self managed superannuation fund (SMSF). Mrs. Conti stated in her will that her superannuation entitlements should be distributed to her children, and not to her husband. Mrs. Conti also made binding nominations with her SMSF in 2002 and 2006 to this effect.

    When Mrs. Conti died in 2010, her most recent binding nomination had lapsed and Mr. Conti was able to nominate a company (of which he is the sole director) as the trustee of the SMSF. Mr. Conti then directed Mrs. Conti`s superannuation to himself.

    The executors of the will challenged this action by Mr. Conti. They claimed that the trustee, in granting the fund to Mr. Conti, did not exercise its discretion in a bona fide manner. Essentially the executors claimed that the failure by the trustee to comply with the directions in Mrs. Conti`s will breached their requirement to act bona fide. The court however reiterated that the trustee is entitled to ignore the directions in the will in favour of their own discretion.

    How Can I Prevent This
    For further information, you can contact BM Law on (07) 3482 6999.