As mentioned in last week’s post, arguably, the highest profile decision in relation to the obligation of a legal personal representative (LPR) to avoid creating a conflict of interest is the decision in MacIntosh.
The decision in Brine v Carter [2015] SASC 205 provides another example of the key issues that need to be considered by LPRs, who are also potential beneficiaries of a superannuation death benefit. As usual, a link to the decision is here.
In summary, the factual scenario was as follows:
1) The deceased appointed his de facto partner and three children from an earlier relationship as his LPR.
2) The de facto made an application for the superannuation death benefits to be paid to her directly, as opposed to the estate.
3) If the superannuation proceeds had been paid to the estate, the three children would have been entitled.
4) For a period of time prior to the death benefit being paid, the de facto partner withheld details of the superannuation death benefit from the three children.
5) Importantly however, by the time the super fund trustee exercised its discretion, the three children were aware of all relevant information concerning the death benefits and had themselves made an application for the death benefits to be paid to the estate.
6) It was held that this was a critical point, that is, the other LPRs had effectively consented to the de facto making her individual claim by themselves making a claim on behalf of the estate in full knowledge of all relevant circumstances.
While the decision of the superannuation fund to pay the entitlements to the de facto ultimately was upheld, a number of key principles were explained by the court, including:
1) Where an LPR seeks payment of a death benefit to themselves personally (i.e. not to the estate), they will be in a position of conflict, unless the will expressly permits the conduct.
2) Where there is no express provision waiving conflict, an LPR should renounce their position before taking any active steps to seek personal payment of the death benefit.
3) Alternatively, the LPR can seek the consent of all other LPRs (if any).
4) In seeking the consent of the other LPRs, there is no obligation to also receive consent from each beneficiary under the will.
5) Complications will likely arise where there is a sole LPR. In that instance, if they choose not to renounce their role, there would be an obligation to receive the informed consent of each potential beneficiary.
Ultimately, the decision is yet another reminder of the importance of a holistic approach to every estate plan.
** For the trainspotters, the title today is riffed from New Order’s song of the same name, from 2005.