The classic example is that of the Katz v Grossman (2005) case. Mr Katz’s Will left his entire estate, including his superannuation benefits of approximately $1 million, to his two adult children, his daughter and son on a 50/50 basis. Mr Katz’s daughter, Mrs Grossman was the individual trustee of her father’s superannuation fund, and upon his death, Mrs Grossman appointed her husband as the second trustee. Mr and Mrs Grossman chose not to follow Mr Katz’s wishes as per his Will, and subsequently paid 100% of Mr Katz’s superannuation benefit to Mrs Grossman. Mr Katz’s son received none of his father’s superannuation benefit.
The Katz V Grossman case highlights the importance of which assets are controlled under the authority of the Will and which are controlled by the trustee of a superannuation fund. Most importantly, the provisions contained within a Will cannot direct the trustee of a superannuation fund in relation to the payment of a death benefit from the fund. The superannuation fund’s trust deed provisions take precedence over any instructions given in a Will regarding the payment of a death benefit from the fund.
Control is the key. The correct use of a well-constructed Binding Death Benefit Nomination (BDBN) for the superannuation fund, in conjunction with a comprehensive Estate Plan, not simply a Will, should provide the platform to ensure that the wishes of the deceased are carried out by the relevant controllers, including both estate executors and SMSF trustees.
Time to review your estate plan? Superannuation is becoming an increasingly large asset for most people and it’s important to preserve those assets for the people whom we want to benefit from those assets upon death.
Would you like to find out more about setting up your own superannuation and estate plans? The experienced and friendly team at BLG are here to help. Make sure you get in touch online or call (02) 4229 2211.