The recent case of McIntosh v McIntosh  QSC 99 shows why having superannuation binding & non-binding death benefit nominations in a Will can be crucial, even if you are a single person.
James McIntosh died without a will in Queensland on 14 July 2013. Mr McIntosh was single and had no children. Prior to his death he had lived with his mother, Elizabeth McIntosh. He had not had contact with his father for many years.
Mr McIntosh had an estate of approximately $80,000.00, however had superannuation of approximately $453,000.00. He had made a non-binding nomination with his super funds naming his mother as the beneficiary.
Superannuation does not form part of a person’s estate and the superannuation trustee will have some discretion as to how the benefits are paid where there is no binding death nomination in place. Elizabeth McIntosh applied for and was granted a Letters of Administration from the Supreme Court, making her the Legal Personal Representative of his estate. Under the rules of intestacy, both parents were entitled to 50% of Mr McIntosh’s estate. Elizabeth McIntosh also applied to her son’s superannuation funds for the superannuation benefits to be paid directly to her. All superannuation trustees agreed to a 100% distribution to Elizabeth McIntosh on the basis of her interdependent relationship with her son prior to his death.
Mr McIntosh’s father engaged solicitors who wrote to the solicitors for the estate, asserting that Elizabeth McIntosh had a duty as Legal Personal Representative to maximize the size of the estate and, accordingly, seek for the superannuation benefits be paid into the estate.
Elizabeth McIntosh made application to the court in relation to the distribution of the superannuation. The Court highlighted that the mother, as Legal Personal Representative of her son’s estate, had breached her fiduciary duty to the estate and her duty under section 52(1)(a) of the Succession Act 1981 (Qld), to act in the best interests of potential next of kin when she failed to seek that the superannuation be paid into the estate – even though she would otherwise have applied for the whole of the superannuation as her son’s interdependent mother. Because of this duty, she was ordered to account to the estate for the superannuation benefits (that is, ultimately 50% of the superannuation benefits were paid to Mr McIntosh’s father).
If Mr McIntosh had completed a binding death nomination with his superannuation trustees, the trustee would likely have been legally obliged to act in accordance with it and his mother would not have been put in a position of conflict as Legal Personal Representative. Alternatively, had the mother simply not applied for Letters of Administration, she would have had no such conflict and would have been free to seek the whole of superannuation benefit on the basis that she was in an interdependent relationship with her son. Had her ex-husband sought appointment as the Legal Personal Representative he would have been bound by the rules of intestacy under the Succession Act 1981 (Qld) to divide the $80,000.00 held in the estate between him and his ex-wife.
This case is a reminder of the need to not only ensure that you have an up to date will, but also to consider whether it is appropriate make binding death nominations with respect to your superannuation funds. Moreover, those seeking appointment as Legal Personal Representatives where a person has died intestate should carefully consider whether it is in their best interests to do so in light of their circumstances and the principles highlighted in McIntosh v McIntosh.