Article

Your Superannuation does not automatically form part of your estate assets when you die, unless you direct the Trustees of your fund to pay your benefits to your estate. Consequently, if you have nominated a person (or persons) to your death benefits rather than your estate, the conditions of your Will won’t be of any assistance in rectifying any problems that may arise.

If you have nominated one of your children as a co-trustee of your super fund, there is all the more reason to have everything clearly and unequivocally set out. Although your may trust your child to carry out your wishes, the effect of death and grief can alter one’s actions. After your death, your child may appoint someone who is not a sibling, for example - husband or spouse, to be a second trustee of your fund. This means they can then direct the proceeds of your superannuation against your wishes. Your non-binding nomination only operates at the discretion of the trustees.

In the case of Katz v Grossman (2005), the father left his superannuation fund to his son and daughter in equal shares via a non-binding nomination. The daughter was appointed co-trustee of the fund. Following the death of their father, the daughter appointed her husband as a second trustee rather than her brother. All of the proceeds we then directed to her alone. As the father had not made a binding nomination, the daughter and her husband were able to help themselves to everything and the courts were unable to stop them, as they were the trustees of the Super Fund. The brother received nothing.