Author: Daniel Stephenson

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. 

As Society moves to more and more blended families, disputes over rights of inheritance under a Will are likely to escalate.  The importance of plain English drafting in a Will cannot be understated. 

The following is an example of a real-life situation which arose in a recent case in the Supreme Court of Victoria, namely Re Staughton; Grant v McMillan [2017].

The family structure and relevant facts were as follows:

1. Wills were made by a husband and wife in 1997. By 2016 both of the testators had then died;

2. At the time of death, the testators had two (2) surviving children of their own marriage, namely a daughter and a son;

3. Under their 1997 mutual Wills substantial benefits were conveyed to their children, but still leaving a residue. The residue in each of their estates (which comprised real estate and a considerable sum of money) was left to “…their grandchildren…”;

4. The daughter had married and was the mother of two (2) children; and

5. The son was not married at the time of the making of his Parents’ Wills and at that time had no children. However, in 2007 he married a woman who had two children from her previous marriage. Those children were obviously his stepchildren.

Relevant Issue to Determine

It was clear that the daughter’s natural children were “grandchildren” and entitled to benefit under the Wills of their grandparents.  The Court had to decide whether the two (2) stepchildren of the deceased’s son were within the description of “grandchildren” under the Wills.

Wording of the Wills

The Wills were not well drafted and did not include a definition of intended words.  The Victorian Supreme Court found that all of the words in the Wills should be given their ordinary wording, based upon community standards of interpretation.

The Court accepted evidence of the family relationships after the executions of the Wills in 1997 and found that it was the intention of the deceased Parents to widely construe the word “grandchild” and cover the possibility that their son may marry and later have his own children or may marry a woman who has her own children.

His Honour referred to a number of NSW case authorities (including Warton v Yeo [2015] and another case of Re Estate of Wright [2016]) which found that a description of the word “descendants” included step-grandchildren in it.  

Accordingly, the Court found that the stepchildren were entitled to benefit under the Will and were covered by the description of “grandchildren” in each Will.

The residue of the Estate was to be divided in equal one-quarter (1/4) shares between the four (4) “grandchildren”.

Drafting your Will

These cases show how important it is for your Lawyer to properly consider all family relationships and future possibilities within that family structure.  A Will should be drafted in clear terms to cover those possibilities. 

If you need a Will prepared in our Firm, then you should make an appointment with either:

•  Matt Howlin

Available for appointments and legal work on Thursday and Friday only.

For appointments please contact:

Ashleigh Abbott – Legal Secretary

Email: aa@gibsonhowlinlawyers.com

• Reg Gibson

Available Monday, Thursday and Friday.

For other days please contact:

Nadia Hollow – Legal Secretary

Email:  nh@gibsonhowlinlawyers.com