31 October 2018

Over the last few years, courts have been called upon to consider whether the executor or administrator of a deceased estate can claim a superannuation death benefit for themselves, or whether they are conflicted from doing so. See our prior publications on these cases:

‘Super, death benefits and the trustee’s discretion – real or imagined? The impact of McIntosh v McIntosh’

‘Super, death benefits and the trustee’s discretion – real or imagined No 2? The executor’s conundrum after Brine v Carter’

The WA Supreme Court has now delivered a decision on this point in Burgess v Burgess [2018] WASC 279.

The facts

Brian Burgess died in May 2015 with no Will, survived by his widow, Denise, and two young sons. He had four retail superannuation accounts.

Denise became the administrator of Brian’s estate, which would be split between Denise and their two children (including any superannuation death benefits paid to Brian’s estate).

Denise received the death benefit from one superannuation fund ($85,000) before being appointed as the administrator of Brian’s estate.

A second superannuation fund paid the death benefit of $338,000 to Denise 6 months after she was appointed as administrator. The third fund paid the death benefit to Brian’s estate and at the time the case was heard the fourth fund with a death benefit of $160,000 had not made its decision.

Denise applied for orders that she did not have to account to Brian’s estate for the superannuation death benefits she had received personally and could claim the fourth superannuation death benefit for herself.

The Public Trustee was looking after the interests of the children, and neither consented to or opposed the orders being sought.

The decision

The Court applied the decisions in McIntosh v McIntosh and Brine v Carter and decided Denise:

  1. could keep the death benefit she received before being appointed as administrator;
  2. had to account for the second death benefit payment to Brian’s estate as by then she had become the administrator and was in a position of conflict; and
  3. must claim the death benefit from the fourth superannuation fund for the estate (and not for herself).

The Court acknowledged that Brian could have done two things to allow Denise to receive his death benefit:

  1. made a Will containing a clause that specifically allowed her to claim his superannuation despite the conflict; or
  2. made binding death benefit nominations to Denise for the superannuation.

Conclusion

This case reinforces the need for an integrated approach for superannuation entitlements as a part of all estate plans, and for those plans to include dealing with any potential for conflicts for a likely executor or administrator who may want to receive a superannuation death benefit personally.

Approaches can include an appropriate Will clause or forcing the death benefit payment to that person through the use of a binding death benefit nomination or reversionary pension.

If you would like more information or assistance with dealing with superannuation entitlements as part of estate planning (including conflicts), contact a member of our estates or superannuation teams.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.