Western Australian has a habit of bringing to light interesting estate issues and one of the latest cases lives up to that reputation and highlights the importance of really understanding estate planning where a self-managed superannuation fund is involved (Ioppolo & Hesford v Conti [2013] WASC 389). 

The background to the case is that a Mrs Conti passed away with large balance in an SMSF, of which her husband was the surviving individual trustee and the only other member.

In the decade before her death Mrs Conti had signed a series of non-binding and binding death benefit nominations (BDBN) directing that her superannuation death benefit should be paid to her husband but these had lapsed. Note, many deeds still unnecessarily refer to the SIS regulations and in specific the need to renew BDBN every 3 years when dealing with Binding Nominations.

However in her Will, Mrs Conti had directed that her SMSF member balance be paid not to her husband but to her children and she specifically expressed her wish that none of her benefit should be paid to her spouse.

Mr Conti, (as the sole surviving trustee of the SMSF) resolved to pay her entire balance to himself. (This would have needed to be done within 6 months of her death under Section 17A(4) of the SIS Act or else a second trustee would have to be appointed).

It is worth reminding you that the Superannuation Complaints Tribunal (SCT) has no authority to review an SMSF trustee decision.

As such, Mrs Conti’s children who were the executors under her Will had to challenge this trustee decision in the Supreme Court of Western Australia.

The Court held that the trustee of the SMSF could pay the death benefit to Mr Conti, and the children failed in their application.

This reinforces the need to consider an overview of the entire estate and other assets like trusts, companies and superannuation to ensure the various documentation required in succession planning is supportive of the clients wishes. Estate planning must consider the full circumstances and specific tailored solutions, especially where there is superannuation and in particular where a SMSF is included.

Some finer points worth noting on this case are that the will which expressed the intention to leave the funds to the children was made in 2005, however she also made a later binding nomination in 2006 where she (again) directed the payment to her husband. So you can see that there was some confusion as to actual wishes. The later nomination lapsed, so at death, there was no binding nomination in force and two conflicting expressions of her wishes (ie the will in 2005 went one way and the BDN in 2006 which went the other).

The central point of the article remains the same, but I don’t think we can be sure what the wife’s actual wishes intentions were at the date of death, given the conflicting and confusing messages she left behind.

The use of a Corporate Trustees, updating the Trust deed to allow for a Non-Lapsing Binding Death Benefit Nomination are some of the measures that may have prevented this outcome.

We can work with you and your solicitor or introduce you to a solicitor with specialist SMSF training to minimise the chances of such problems occurring.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

 SMSF Specialist Advisor™ & Financial Planner

Tel: 02　8853 6833,  Mobile: 0413 936 299

liam@verante.com.au

PO Box 6002 BHBC, Baulkham Hills NSW 2153

 Liam Shorte is a partner in VERANTE Financial Planning, Corporate Authorised Representative of Genesys Wealth Advisers Limited, Licence No 232686, Genesys Wealth Advisers Limited ABN 20 060 778 216 • AFSL No.232686

Important information :

The information in this article is provided for illustrative purposes only and does not take into consideration your personal circumstances. You are encouraged to seek financial advice suitable to your circumstances to avoid a decision that is not appropriate. Any reference to your actual circumstances is coincidental. Genesys and its representatives receive fees and brokerage from the provision of financial advice or placement of financial products.