Do inheritance disputes include your superannuation?
Published 30 May 2014
Most Australians will hold at least a small amount in their superannuation fund when they die. However, these funds do not automatically become part of the deceased’s estate, which can lead to inheritance disputes related to the superannuation laws of succession.
When you pass away, the trustee of your super fund decides which of your dependents will receive your superannuation, including as death benefits offered by your provider. The money will often only be passed on to a dependant under superannuation law or your estate.
Under superannuation law, only eligible people can be classified as a dependent. This includes a spouse, child, de facto partner, any person with whom the deceased was in an interdependency relationship and all individuals who were financially dependent on the fund’s owner.
The details of this superannuation law mean that you cannot simply state in your will who you wish to receive your fund in the event of your death. Fortunately, you can nominate a beneficiary through your super fund provider, using a binding death benefit nomination.
Binding nominations effectively take away the trustee’s discretion and enable you to choose who should benefit from your superannuation. However, the choice to do this can result in beneficiaries of your estate choosing to contest your will.
Superannuation dispute between parents
One case that demonstrates this issue was recently seen by the Supreme Court of Queensland. After the death of her son, a woman – who was separated from the deceased’s father – was named as the executor of his estate.
The son had died intestate, which means he did not create a will before passing away. Because of this, succession laws meant his parents would share equal halves of his estate. However, the mother had applied to be the beneficiary of her son’s superannuation, due to the fact they were living in an interdependency relationship.
Because the woman’s applications were successful, the superannuation funds were not counted as part of the estate. This meant that the son’s father received only $40,000 while the mother received benefits exceeding $450,000.
The father then contacted a contesting wills lawyer to find out if he could access any of the superannuation funds. The Supreme Court ruled that the mother’s decision did not follow intestacy laws and instead preferred her own interests. She was ordered to pay the proceeds into the estate and split them equally between herself and the deceased’s father as per the rules of succession.
If a family member has passed away and their superannuation is under dispute, contact Gerard Malouf Partners for more information on contesting the will.