Superannuation Complaints Tribunal

Website Team Technicians • February 22, 2019

I have dealt with a number of Superannuation Death Benefit claims recently so it might be timely to make few comments about Superannuation Death Benefits.


The common situations where disputes arise are:


1) there is a “blended family” (that is where the current spouse of the person who dies is not the parent of the deceased person’s children); and


2) Where the Deceased person is a young person who has not made a will.


The second situation is a particularly traumatic one. Unfortunately, very few young people (people under, say 35 years of age) have gone to the trouble either of making a will or preparing a Binding Death Benefit Nomination. Why would they, as they don’t expect to die?

However, most Superannuation funds have a ‘death insurance’ component. This will usually be worth over $200,000.00 and quite often a lot more. Who will the Death Benefit be paid to?


Case Study 1


The Deceased person committed suicide at age 30. He did not have a will. He did not make any Binding Death Benefit Nomination.

He had two superannuation funds (one only had a contributions balance of less than $1,000.00 but an insurance death benefit of nearly $400,000). The other had a death benefit of nearly $200,000.00 most of which was also death insurance. So the total of both Superannuation funds was over $600,000.00

He was not married and had no children. He did, however, have ‘girlfriend’ who had been living with him for about four months. In Western Australia, a “de facto spouse” is only entitled in a Deceased estate if they are living in a de facto relationship immediately before the deceased person died and the relationship had existed for two years before the person died (for a case example about “immediately before death” read the case of: Chan v Mazurkiewicz

If the Superannuation Death Benefit was paid to the Deceased’s estate then it would be divided between his siblings (one half) and the other half to his parents.

The relationship between the Deceased and the “girlfriend” was (according to the Deceased’s mother) a volatile one and was unlikely to have continued.

Both Superannuation Funds made a determination to pay the death benefit to the ‘girlfriend’. Needless to say the Deceased’s mother was distraught.


Complaints were made to the Superannuation Complaints Tribunal (“SCT”). In all probability, the decisions of the Super fund trustees would have been upheld by the SCT. However, a deal was negotiated between the parties whereby they agreed to split the Superannuation 50/50.


Case Study 2


In this matter, the deceased was aged only 33.

Again, death was by suicide.

He had Super death benefits payable of about $530,000 and other assets (including a house) with a net value of about $300,000.00.

He did not have a will and there were no Binding Death Benefit Nominations in place. He had been in a ‘de facto relationship” for about six years. However, just before he committed suicide, the relationship allegedly came to an end. In point of fact, the Deceased’s parents believed that the Deceased committed suicide after the de facto declined the Deceased’s request to marry him.

As in case 1, if there was no de facto entitled in the deceased’s estate, all of his estate would be divided between his parents and his siblings.

The Superannuation Funds in this case decided to pay the funds “100%” to the legal Personal Representative. However, the de facto (who denied that the relationship between she and the deceased had come to an end) foreshadowed complaints to the Superannuation Complaints Tribunal and also a claim under the Family Provision Act.

Again the matter was settled by a negotiation on the basis that the estate was split 50/50.


Superannuation Complaints Tribunal


The Superannuation Complaints Tribunal (‘SCT”) deals with complaints from persons aggrieved with a decision made by the Trustees of a Superannuation Fund. Very commonly, the complaints are made when the Superannuation Fund has decided to pay a death benefit to the “de facto” spouse of the Deceased.

In many cases, the complainant will be the adult children of the deceased or the persons who would otherwise inherit the Deceased’s estate either through the Deceased’s will or on an intestacy (i.e. no will). Typically, the allegation will be that the “de facto” was not really in a de facto relationship with the Deceased (they were ‘just friends’), or the relationship had ended, or, simply, “the deceased wouldn’t have wanted him/her ot get the death benefit.”


Most people, of course, have little experience of what happens to superannuation when a loved one dies. Unfortunately, this is an area of the law that has outcomes, I personally think, that is both unexpected and contrary to what most people think should occur.

Most people would agree that any superannuation death benefit should be paid to persons who are financially dependant upon the Deceased. However, they quite reasonably would expect that those people would be the persons either set out in the Deceased’s will or that they woud be the persons who take on an intestacy (if there is no will). The trustees of Superannuation see things quite differently, as guided by the legislation and the terms of the Superannuation Trust Deed.

The trustees will invariably point to the fact that if a person wanted the superannuation death benefit to be paid in a particular way, that person would have made sure a Binding Death Benefit Nomination was in place (or a Non Lapsing Nomintion- if the terms of the Super fund trust deed permits it). In partiuclar, if the deceased has wished the death benefit to be dealt with by their will, they would have specified their legal personal representative (that is the executor of the will) as the nominated beneficiary.

So if there is no Binding Death Benefit Nomination, the trustees will look to pay to those persons who were financially dependant on the Deceased. The trustees of the Superannuation Fund will look for persons who would have recieved financial support from the Deceased if he had simply retired (rather than died).

A summary of how death benefits are dealt with is published by the SCT see: Death Benefits Brochure

A deeper understanding of how death benefits are resolved can be found here: Key Considerations that apply to Death Benefits Key Considerations that apply to Death Benefits. http://www.sct.gov.au/dreamcms/app/webroot/uploads/documents/KeyConsiderations-DeathBenClaim.pdf


There are also case studies set out on the Superannuation Complaints website that give examples of various situations.

What the brochures and case studies don’t give an insight into is how little evidence is acceptable to a trustee before it will decide that a person was ‘financially dependant’ upon the Deceased. It is often the case that the Superannuation Fund decides that it will pay out to the ‘de facto’ even if that relationship has only been in existence for a short time (and other people might conclude that the Deceased and the de facto were only in a casual relationship).

You are strongly encouraged to seek legal advice as soon as possible after a person dies. Also, do not rely upon the fact that someone else ‘in the family’ is seeking legal advice (particulary if you are the person who was in a relationship with the deceased).. It is important that you get independent legal advice early in the piece.


Challenging a Decision of the Superannuation Fund in the Superannuation Complaints Tribunal


The prospects of successfully challenging a decision of the Superannuation Fund are slim: in the reporting year ending 2015 there were some 2668 written complaints to the SCT and 1,739 complaints that were either withdrawn or resolved (of which about 40% related to the payment of death benefits). Of the 1739 complaints dealt with only 286 got to the final stage of being reviewed by the Tribunal. In most cases (224) the original decision of the Superannuation fund was upheld. In percentage terms, this means about 80% of the matters heard by the SCT are upheld (or 20% overturned) and that, overall, only about 3.5% of all applications have a successful outcome.

(see page 19 of the annual report) SCT Annual Report 2014-15

The reason why most complaints are unsuccessful is because the Superannuation Complaints Tribunal does not simply make a new determination as to how any death benefit should be paid but rather decides whether it was ‘unfair or unreasonable’ for the Superannuation fund to make that decision in the first place.

However, all is not grim: of the 293 concluded death benefit cases in 2014/15, 209 (71.3%) were settled. In other words, even though a decision of the Tribunal is unlikely to be overturned, most clams result in some sort of settlement.

No doubt a factor in that leads to settlement is the lengthy delay in matters progressing through the complaint process.

If you wish to make (or defend) a complaint to the Superannuation Complaints Tribunal, contact Reg Biddulph

.RJB


This entry was posted in Uncategorized and tagged Challenge Superannuation Fund decision, de facto and Superannuation, Superannuation, Superannuation Complaints Tribunal on December 19, 2016.

Should you seek to get probate where the Deceased may not have had capacity?

By websitebuilder • March 13, 2024
The recent case of Diedler v Borowiec 2023 WASC 396 is perhaps a cautionary tale for those beneficiaries of a doubtful will. The Deceased made a will with the Public Trustee in 2018. At the time he has 97 years old. For all intents and purposes, when the will was prepared, the Deceased appeared to have capacity- he lived independently, drove his own car (!) and managed his own finances. He did not want his step son and his own daughter to benefit from his estate. Following a trial , a judge found that the Deceased suffered from delusions at the time he made the will including a belief that his daughter was a witch, was trying to poison him. That she was practising witchcraft and that she flew through his window and was stealing items form him. In fact there had been concerns about his mental health for a least five years prior to him making the will. Following his death, the Public Trustee obtained medical reports and came to the conclusion that the 2018 will was invalid. However, the beneficiaries of the 2018 will were not happy with that decision and decided to seek proof of it by issuing proceedings in solemn form in the Supreme Court of Western Australia. Having lost the case, the question arose as to who should pay the solicitors costs. The court found that, having regard to the medical evidence, it was unreasonable for the beneficiaries of the 2018 will to have sought to prove it. Several offers of settlement (‘Calderbank Offers’) had been made by the beneficiaries of an earlier (1981) will, all of which had been rejected. The court ordered that the Plaintiffs (the beneficiaries of the 2018 will) pay the Defendants costs on an indemnity basis. Those costs would no doubt be very substantial. Although the person seeking to propound the will may have a honest (bona fide) belief that the will is valid, the belief must also be reasonable. On the facts, with the available medical evidence, the court found that the belief was not reasonable and the Plaintiff should bear not only their own legal costs but also the Defendants. As a point of reference, in the Victorian case of O’Donoghue v Mussett [2008] VSC 63, the Plaintiff’s costs were $250,000 up to the third day of a trial. The Defendant’s costs would be similar, so it becomes a very expensive exercise and not on to be lightly undertaken. If you need advice concerning the validity of a will, contact us now.

Preparing A Will When You Have Properties In Two Different Countries

By websitebuilder • August 22, 2022
Great care must be taken when drafting a will to cover the situation where you have assets in different countries. Generally speaking, if you make a will in Australia (or in any other country) it will deal with all of your estate wherever situated including land held in any country (such as, for example, in the UK or India). This would require, upon your death, for a grant of probate to be obtained in Australia to deal with the Australian assets and then for that grant to be ‘resealed’ in the other country to deal with the assets in that country. This is a straight forward process in countries that are "One of Her Majesty's Dominions" but may be more difficult in other countries that have different systems of law. There may be situations where it is preferable to have two wills, one for each country where the assets are held. For example, it may be appropriate to appoint an Australian executor to deal with the assets in Australia and a will appointing a UK executor to deal with the assets in the United Kingdom. Particular care should be taken when preparing such wills. We would recommend that only an experienced solicitor be engaged (in each country) and the solicitor preparing the second will should be given a copy of the will made in the other country. An example of what can go wrong can be seen in Sangha v Estate of Diljit Kaur Sangha 2022 EWHC 2157 Ch . There, the deceased had assets (about £35m worth) in both the UK and India and made a will in India in 2016 that had a (standard) revocation clause (to the effect “I hereby revoke all prior wills”). The question arose was did this revoke an earlier will made in the UK in 2007 that left all of the Deceased’s UK property to his second wife. In the event it was held (on appeal) that the Indian will made in 2016 did not revoke the earlier 2007 UK will. Such a situation could have been avoided altogether if the Indian will had expressly stated “I revoke all my previous wills including any will made by me dealing with my estate located outside of India” or (if that was not the intention) “I revoke all my previous wills except any will dealing solely with my estate in the United Kingdom’. If you need help preparing a will, please contact us on 08 9398 5533 .

De facto and Revoking a Will

By Website Team Technicians • February 22, 2019
Learn how ending a de facto relationship affects your will. Biddulph & Turley explain legal considerations and the importance of updating your estate plans.

Should I use a will kit to make my will?

By Website Team Technicians • February 22, 2019
“The making of home-made Wills can lead to problems. That statement is not a paid advertisement for the legal profession. It is a statement of fact. This case illustrates the point.” Per Master Sanderson Epps v Homer [2006] 290 The Background Mr and Mrs H. were married in 1986. Mr H. had three children from a previous marriage. Mrs H. had four children from a previous marriage. Mr H. got a will kit from a newsagency and drafted wills. What they wanted to achieve It appears that what Mr H and Mrs H wanted to achieve was: i) to give certain specific items to their respective children; ii) Mr H gave $15,000.00 to be divided between his children; iii) The remainder of their estate (‘the residue’) was to go to the survivor of them; iv) Upon the death of the survivor of them (that is when the last of them died) the residue was to be split 50% between Mr H’s children and 50% between Mrs H’s children. A perfectly straightforward and reasonable arrangement for blended families. What the will said After the arrangements described in (i) and (ii) above Mr H.’s will said: “BUT IN THE EVENT THAT MY WIFE …. AND MYSELF SHOULD PASS AWAY AT THE SAME TIME (emphasis added)….. I LEAVE ALL THAT PART OF MY ESTATE BEQUEATHED TO MY WIFE TO OUR CHILDREN, FIFTY PERCENT (50%) TO BE SHARED EQUALLY BETWEEN MY NATURAL CHILDREN, AS PREVIOUSLY NAMED, THE REMAINING FIFTY PERCENT (50%) TO MY STEP CHILDREN, TO BE SHARED EQUALLY” (between them). The Problem Mr H. died in 2004. Mrs H. had died in 1998 (six years before). They had not died “at the same time” as contemplated in the clause in the will. The question was, did the wording of the will have the effect that the residue of the estate would be split 50/50 in these circumstances? The court said no. The words used were unambiguous. Mr and Mrs H. had not passed away “at the same time”. There was a six year gap between their deaths. What Mr and Mr H had really meant to say was “If (my wife or husband) does not survive me to divide the residue of my estate equally between those of my children and my (wife or husband’s) children.” The unhappy or happy result (depending upon your point of view) The clause in the will failed. There was an intestacy of the part of the will dealing with the residue (which was most of the estate). According to the rules of intestacy, Mr H.’s children were entitled to all of the remainder of his estate and Mrs H’s children missed out- step children are not a person’s children unless they are legally adopted. This entry was posted in Uncategorized on February 19, 2016.

Can an unsigned will be valid.

By Website Team Technicians • February 22, 2019
Understand the validity of unsigned wills in Australia. Learn when courts may accept them and the importance of proper execution for your estate.

10 Mistakes with Wills and Estate Planning

By Website Team Technicians • February 22, 2019
Ten Most Common Mistakes Made with Wills and Estate Planning 1) Not having a will. If you don’t have a will, then you are leaving a problem behind for everyone. This applies even if you situation is ‘simple’ and doubly so if you die leaving a second wife or de facto and children from a previous marriage or relationship. Any will is better than no will. 2) Making your own will. It may be that you are able to make a simple will quite easily. However, if you are making a simple will, make sure you have a simple situation. A ‘blended family’ is never a simple situation. Nor is it simple if you own a business, have a farm (or other significant property). 3) Not understanding that your wishes can be over ridden by a Court. More specifically, this means not understanding that certain groups of people (spouses -including de facto spouses, children – including adult children that you are estranged from) are entitled to provision from your estate. It doesn’t matter that you have had little contact with your (now adult) children since you got a divorce (or for whatever other reason). What matters is that you make ‘adequate and proper’ provision for them. This is not what you decide is ‘adequate and proper’ but what a court thinks. 4) Thinking that you are not in a de facto relationship. It doesn’t matter what lengths you go to (keeping finances separate, keeping separate residences for Centrelink purposes etc). It doesn’t matter that YOU think you are not in a de facto relationship or even if you and your partner both think you are not in a de facto relationship. What matters is whether a court decides that you are in a de facto relationship. 5) Not understanding the difference between joint tenancy and tenants in common. Joint tenancy means that, when one co-owner dies, that persons interest in the property passes authomatically to the survivor. It doesn’t matter if the will says something different. Joint tenancy is great where it is intended that the property goes to the surviving spouse (as it means that no grant of probate is required). However, if there are children from a previous relationship that you wish to benefit, joint tenancy may mean they miss out. 6) Not understanding that Superannuation is not dealt with by your will. If you are a member of a public or industry fund, the trustee of the fund must pay any death benefit according to: a) any Binding death benefit made by you (this can only be to a spouse, a child who is financially dependent upon you or to your estate); b) A ‘financial dependent’. This includes a de facto (see point 4), children and persons who were otherwise financially dependent upon or in an “interdependency relationship” with the Deceased. It may or may not include step children (fact specific). There are many, many cases where the superannuation is paid to a ‘girlfriend’ (who no-one else believes is a de facto) and not to parents or siblings. A SMSF must also be dealt with by the terms of the Superannuation Deed (and not your will). 7) Not understanding that assets held in companies, trusts or partnership are not assets that can be dealt with by your will. 8) Leaving making your will too late If you make a will when you are very elderly or ill, you greatly increase the chance of a challenge on the grounds that you lacked testamentary capacity when you made the will. 9) Not keeping your will safe and where it can be found after you die. All too often the original will cannote be found after you have gone. 10) Thinking it is all too hard. See point 1. This entry was posted in Uncategorized on August 7, 2016.

Recognition in Doyle’s Guide

By Website Team Technicians • February 22, 2019
Biddulph & Turley recognized in Doyle’s Guide for excellence in family law and deceased estates. Trusted legal experts serving Perth and beyond.

Gift or a Loan

By Website Team Technicians • February 22, 2019
Stay informed with Biddulph & Turley's Perth Family Law Blog—insights on wills, estates, child support, and property division.

Not all Family Provision Claims are Successful

By Website Team Technicians • February 22, 2019
The very recent decision in MILLS -v- PILLER [2017] WASC 45 confirms a recent run of unsuccessful claims in the Supreme Court of Western Australia. The facts were that the Deceased died age 83. She was dviorced and left five adult children who were all in their 50’s. The Applicant was the Deceased’s daughter aged 55. She was unemployed. She had no assets to speak of. She was not married or in a de facto relationship. However, she and her adult daughter had lived with the Deceased since 2012 (approximately 3 years before the Deceased died. The Applicant received Centrelink Benefits including the ‘carer’s pension’ for looking after the Deceased. The Estate had a net value of about $2.2 million (mainly comprising two properties, one of which was the residence in which the Applicant resided with the Deceased). This meant that each of the five children would get about $400,000.00 from their mother’s estate. Position of Other Beneficiaries. One sister was aged 60, was married and earnt $65,000 pa. Her husband was a concrete labourer. They had a house worth $850,000 with a mortgage of about $492,000. Another sister was 58, separated from her husband and had a salary of $88,000 pa. She had some super ($95k), a car and savings of about $30k. She had agreed with her husband that she would keep the former matrimonial home (worth about $900k) and pay him $490k. A brother was aged 59, worked as a ‘brickies labourer’ three days a week earning $228 per day. He had super worth about $80k and a $3,000.00 car. He had debts of $53,000.00. He also expected to inherit 80% of a house owned by his father’s estate (upon the death of the life tenant). The youngest brother was aged 52. His assets were said to be worth about $262,000 and his liabilities were $16,500. He earnt about $60,000.00 a year. Financially, the Applicant was in a worse position than her siblings. She wanted $650,000 to be paid to her from the estate (including the $400,000 she was entitled to under the will). It was put on her behalf that this would be used to fund the purchase of a house for her to live in. The Decision. The Court found that the provision made in the will did not fail to make ‘adequate and proper provision’ for the Applicant. The court said there were a number of factors that weighed in her favour (the fact she was not married, had not worked for some time, had various ailments, did not have an extravagant lifestyle and had limited reserves). However, weighing these factors up against the competing interests of her siblings (who also suffered various ailments and had ‘liabilities and modest or little superannuation’) there could be no justification for depriving the siblings of their inheritance. Comment. Most members of the community would be of the view that a will that divides an estate equally between a person’s children is a ‘fair’ will and a proper one in all the circumstances. Parents tend to give each of their children an equal start in life. Some children do better than others. The ones that do less well sometimes have an expectation that the parents will ‘make the appropriate adjustment’ in their will to ‘level things up’. This case perhaps illustrates the proposition that a court will not lightly interfere with such a will. There would have to compelling reasons why such a will should be departed from (for example, if the Applicant had severe health problems and/or had devoted substantial time and effort in looking after the Deceased and the other beneficiaries were very well off). None of those factors were present in this case. If you are considering challenging a will (or defending one), please contact us. This entry was posted in Uncategorized on February 24, 2017.

Another Home Made Will Bites The Dust

By Website Team Technicians • February 22, 2019
In Rhodes v Rhodes the Deceased made a will which said: “ALL MY WORLDLY GOODS TO MY EX WIFE WHO WILL DISTRIBUTE IT TO MY CHILDREN AS SHE SEES FIT.” Presumably, the Deceased and his ex-wife “got on well” (heard that before). They had 5 children together and the Deceased had one other child from another relationship. So after he died, the ex-wife took the view that if she didn’t distribute everything to the children, she could keep the rest. The question was, was she right? The Court ruled that no she couldn’t: the words “will distribute it” meant that she had an obligation to do so. The words “as she sees fit” meant that she didn’t have to treat the children equally (not as the ex-wife contended, that if she saw fit not to do so, she didn’t have to distribute it). The moral of the story: 1) Perhaps it’s not always a good idea to make your ex-wife your executor; 2) It would have avoided legal fees in the tens of thousands of dollars by spending $400-$500.00 to get a solicitor to prepare the will making your intentions clear. If you need a will, please contact us. This entry was posted in Uncategorized on March 1, 2017.
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