Madgwicks Special Counsel Rebecca van Langenberg discusses Superannuation in the context of Estate Planning and Death Benefit Disputes. As the quantum of superannuation increases, the risk of superannuation death benefit disputes has become much higher, with the number of cases being litigated continuing to rise, she writes. Rebecca gave a presentation on this topic at the recent 4th Annual Estate Planning Conference.
For many clients, superannuation is an important cornerstone of their estate plans. There are many aspects of superannuation, however, that are still widely misunderstood that have the potential to disrupt estate plans. The super changes that apply from 1 July 2017 have further complicated death benefit planning in relation to superannuation.
This article will review mistakes and misunderstandings to avoid when assisting clients, including:
- payment of death benefits including transfer balance cap;
- financial dependents and adult beneficiaries;
- binding death benefit nominations (BDBNs) and reversionary pensions;
- strategies for managing control of fund issues; and
- trustee obligations on a dispute arising, and steps to minimise the risk of death benefit disputes
As the quantum of superannuation increases, the risk of superannuation death benefit disputes has become much higher with the number of cases being litigated continuing to climb. Implementing clear and considered strategies to minimise the risk of death benefit disputes and to manage other potential issues that may arise is therefore vital.
Death benefit disputes involving superannuation are becoming increasingly common as illustrated by the increasing number of cases involving a challenge to the control of the fund, the validity of binding death benefit nominations and the exercise of the trustee’s discretion. Accordingly, it is imperative trustees take proactive steps to minimise the risk of a death benefit dispute arising.
Having a first line of defense in preventing a death benefit dispute and potentially costly and time consuming litigation is crucial. The following strategies are effective starting points in avoiding disputes:
- a comprehensive document history review. It is important to ensure the document chain is complete and correctly executed;
- reviewing and amending (where required) the fund deed;
- reviewing or implementing a binding death benefit nomination for each member, subject to the member’s broader estate planning considerations; and
- considering and planning for control of the fund changing on the member’s death.
While it is impossible to eliminate the risk of a death benefit dispute arising, there are a number of strategies and preventative measures that can be implemented to minimise the risk of a successful challenge, both to the legitimacy of the trustee’s appointment and the exercise of the trustee’s discretion to pay a deceased member’s superannuation death benefits to one or more eligible beneficiaries.
Details of coming Estate Planning seminars will be published online soon.
Special Counsel Rebecca van Langenberg is an experienced commercial lawyer at Madgwicks with specialisations in superannuation, funds management and private wealth management. She also has tax and structuring advice experience within the superannuation context. She regularly advises on complex superannuation matters, including death benefits disputes, ATO audits and voluntary disclosures. Rebecca has over 10 years’ experience advising self-managed superannuation funds, accountants, family-owned businesses and high net wealth individuals. Rebecca focuses on providing strategic and commercially focused advice in delivering client outcomes. Rebecca has a Bachelor of Laws (Hons) and a Master of Laws from Melbourne University. Rebecca is a regulator presenter and author and has been quoted in numerous publications, including the Australian Financial Review. Contact Rebecca at firstname.lastname@example.org or connect via LinkedIn.