Superannuation and your Will

In present Australian society, a large number of middle aged and elder people hold a significant proportion of their wealth in Superannuation Funds.

In our Firm we have seen an increasing trend towards what might loosely be called “inheritance impatience” where some family members influence an elder parent to withdraw or transfer superannuation funds prior to death.

As a general guide, we point out that:

1. Superannuation assets are not covered by your Will.

2. The Trustees of the majority of Superannuation Funds remain bound by what is known as Binding Death Benefit Nominations (BDBNs), although the types of BDBNs and the language governing each Superannuation Fund can vary significantly. For many people, a BDBN obviously forms an integral and most important part of their Estate Planning.

3. A person holding an Enduring Power of Attorney would, in most cases, be entitled to execute a BDBN on behalf of the person granting the Power, always subject to the Attorney exercising that function as a fiduciary and without creating a personal benefit for themselves.

It is the view of the writer, one which is still subject to discussion in the legal community, that a person holding an Enduring Power of Attorney should not be able to sign a BDBN on behalf of the grantor of the Power, but should be able to confirm the validity of an existing BDBN to ensure that the Trustees of the relevant Superannuation Fund comply with the wishes of the deceased person.

4. In making a Will, it is clear and accepted law that a Will can only be made by a person with legal capacity at the time the Will is executed. An Enduring Power of Attorney vests in the Attorney the right to execute documents and perform legal tasks whether or not the grantor of the Power retains mental capacity, but not the right to make a Will.

What should you do?

To avoid the obvious uncertainty in the law at this time, an Enduring Power of Attorney can be made expressly restricting the rights of the Attorney to make, confirm, amend or revoke a BDBN for the grantor.  In other words, your BDBN will stand alone and direct the Trustees to pay a death benefit to your nominated beneficiary.  However, there will be some circumstances in which a person holding the Power of Attorney is intended to benefit from the BDBN and, for that reason alone, a properly drafted Enduring Power of Attorney will expressly authorise the Attorney to nominate themselves as the Beneficiary.

As one can readily imagine, the Lawyer certifying any Enduring Power of Attorney will need to have clear and cogent instructions from the grantor before giving such express authorisation in the document and before certifying the Enduring Power of Attorney.

Our Firm recommends that any person holding significant assets in superannuation and considering making or updating a Will, or executing an Enduring Power of Attorney, should obtain specific and independent legal advice on their situation before executing any relevant document dealing with that asset.

If you require legal advice in this area, then appointments can be made with the writer, Matt Howlin, Reg Gibson, Johnathan Neofytou or Daniel Stephenson at any convenient time. 

 

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The Chambers

51 Croydon Street

Cronulla NSW 2230

chambers@gibsonhowlinlawyers.com

t 9523 6111

f 9523 0785

PO Box 61 Cronulla 2230

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