The fine line (& time)** between being entitled … and not

An often over looked aspect of estate planning related to the payment of death benefits from a superannuation fund.

While with a gift under a will a beneficiary who dies after the willmaker, but before the distribution is made, will still (through their own estate) be entitled, this generally is not the case with superannuation benefits.

Arguably the leading case in this area is Webb v Teeling [2009] FCA 1094.

In summary the factual scenario was as follows -

1. a member of a super fund had passed away, validly nominating a dependant to receive the death benefit;
2. the dependant was alive at the time of the member’s death;
3. the dependant however subsequently died before the death benefit was paid and their legal personal representative (LPR) sort payment to the originally nominated beneficiary's estate.

It was held that the death benefit could not be paid to the LPR of the deceased dependant because they were neither:

1. a dependant of the deceased member; or
2. the deceased member’s LPR.

With the aid of hindsight, the workaround in similar situations is to ensure that if the nominated beneficiary dies before the death benefit is paid, the funds should pass (ideally under a binding nomination) to the LPR of the member.

The member's will should then direct the amount specifically to the intended recipients and can do so without restriction as the superannuation rules will have been complied with by the initial payment to the member's LPR.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** for the trainspotters, ‘Fine Time’ is a song from New Order.

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Please remember** - one reminder in relation to paying super death benefits

Last week's post considered the fact that in some circumstances a superannuation death benefit may be paid, other than to a member's dependants or legal personal representative (LPR) – which according to superannuation laws are generally the only two possible recipients.

One piece of feedback in relation to this related to how such a payment is permissible given the superannuation rules seem to so clearly mandate that death benefits must be paid to a dependant or LPR.

The reason that a wider class of potential recipients is possible is set out under Superannuation (Industry) Regulation 6.22(3), which states that the relevant conditions are satisfied if:

1. the trustee has not, after making reasonable enquiries, found either an LPR, or a dependant, of the member; and
2. the person in whose favour benefits are cashed is an individual.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Cure song 'Treasure'.

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