Your Inheritance Monthly — June 2024 Edition
This Month’s Common Misconception
“Superannuation is an estate asset”
Superannuation is not considered an estate asset unless it is paid into the estate via the deceased’s Legal Personal Representative (that is, their executor or administrator).
In Australia, a person’s superannuation does not form part of their estate. In the case of an Industry Fund such as AustralianSuper, Cbus, or Hesta, the Fund will provide the member with the option to prepare a nomination form, within which the member can nominate who is to receive the death benefit upon the member’s death. Similarly, a Self Managed Super Fund (SMSF) will usually allow the member to prepare a nomination form specifying who is to receive the death benefit.
Under superannuation laws, a member can generally only nominate — and the Fund can generally only pay the benefit to — the member’s spouse, child, dependant, interdependant or Legal Personal Representative (i.e., the estate).
When does the death benefit become part of the estate?
It is only when the fund has determined to pay the benefit to the member’s Legal Personal Representative, either because (a) the member has nominated their Legal Personal Representative as their beneficiary, or (b) where the fund has been unable to identify a spouse, child, dependant or interdependant, that the death benefit will be paid into the estate. Once a death benefit is paid into the estate, it will become available for distribution under the terms of the Will or where there is no Will, under the rules of intestacy.
Interestingly, in certain circumstances the law in NSW allows a superannuation death benefit to be used to fund a successful family provision claim, even where the deceased nominates a specific beneficiary to receive the death benefit.
Read more about Family Provision Claims at our blog 8 Things to Consider When Making a Family Provision Claim.
If you have questions about how superannuation forms a part of your estate, contact us today.
Need Wills & Estate Help?
- No win no fee*
- Highly reviewed
- Will dispute experts
Our Recent Disinheritance Cases
This month we helped three clients to design estate plans to disinherit particular family members
Client 1
The first case involved a client who approached us wanting to disinherit two of his three children from whom he had been estranged for some five years. Our client did not feel a need to provide for those children given their conduct and treatment of him.
We helped our client design an estate plan which would place several assets outside the scope of family provision legislation, while offering moderate protection from claims for the remaining assets.
Client 2
The second case involved a client who approached us to prepare an estate plan which reduced the risk of a family provision claim by his former wife.
Whilst the client did obtain a formal court orders at the time of his separation from his former wife, setting out how the couples financial resources were to be divided, the agreement did not contain a release to future claims (which is commonly present in a professionally drafted Binding Financial Agreement) including claims against his estate after his death. Therefore, there was a risk that the former spouse may come back for a second bite of the cherry once our client dies.
We designed an estate plan including taking steps to sever the joint tenancy of the family home owned with his new partner, so as to protect half the house, and prepared a testamentary statement setting out the reasons why no provision had been made for the former spouse.
Client 3
The third client was a woman who was seeking to disinherit her husband, in favour of her children.
The client’s desire to disinherit her husband arose because of the husband’s conduct towards her, namely, his financial abuse. One example of the financial abuse was that, despite our client contributing to the mortgage of the family home for several decades, the husband ultimately refused to transfer half the house to our client, leaving her estate substantially lower compared to where it would have been if she owned half the house as tenants in common with her husband. Consequently, our client sought to divert what modest assets she did have to her children.
We designed an estate plan which included a detailed testamentary statement setting out the reasons why no provision had been made for the husband, including his conduct regarding his refusal to transfer half the house to our client, and other negative conduct by him towards her throughout the marriage.
Do you have an Inheritance Question
Submit an Inheritance Question to our team today
