Wills & Estates Newsletter – October 2016
Published on October 5, 2016 by Adelaide Ryan , Brett Fatches , Joshua Dale and Patricia Monemvasitis
In this edition our team report on:
- Superannuation Death Benefits and the Notional Estate regime;
- Importance of carefully drafting Heads of Agreement – a deceased estate example;
- Intestacy rules for Indigenous Australians; and
- Retirement village living.
The Carroll & O’Dea Wills and Estates Team
Notional Estate claws grip onto Superannuation
If your Will is challenged and there are insufficient assets in your estate to satisfy the provision order, the court may call on your superannuation death benefits as notional estate in order to satisfy the claim.
Superannuation death benefits
A superannuation death benefit comprises of money held in a superannuation account plus any life insurance payable to the superannuation account.
When a member of a superannuation fund dies, the trustee of the fund must pay a death benefit in accordance with the fund’s rules. The Superannuation Industry (Supervision) Regulations 1994 (CTH) (SIS Regulations) restrict the persons to whom a fund can pay all or part of a death benefit. Regulation 6.22 requires that a fund can pay all or part of a death benefit to either or both of:
- the member’s legal personal representative (LPR) – the person handling the estate of the deceased member;
- one or more of the member’s dependants.
A summary on death benefit dependants can be found in this article.
Notional estate regime
Chapter 3 of the Succession Act 2006 (NSW) (Succession Act) provides that the court may make an order (a notional estate order) if the court considers that adequate provision for the proper maintenance, education or advancement in life of an eligible person has not been made by a testator’s Will or by operation of intestacy and the court thinks a notional estate order ought to be made. Notional estate orders ensure that the family provision principles are not frustrated by the testator’s financial manoeuvring.
Whilst superannuation death benefits may not form part of the estate, the court may designate it as “notional estate” if a family provision order is made and the actual estate cannot cover the provision.
Given the scope of relevant property transactions, the act or omission of making a binding death benefit nomination (or changing a binding death benefit nomination) would be sufficient to be a relevant property transaction with the result that the death benefit would be within the scope of a notional estate order. Further, a resolution of a superannuation fund trustee to make payment of a death benefit to a dependant can also be deemed to be a relevant property transaction.
Real life application: Kelly v Deluchi [2012] NSWSC 841
In Kelly v Deluchi [2012] NSWSC 841, the children of the deceased applied for a family provision order and sought an order to designate all or part of the property held by the Trustee as notional estate.
Authors: Adelaide Ryan, Solicitor and Michael Crowe, Associate
The Importance of Clear Drafting
Estate of Sullivan [2016] NSWSC 524
In the case of the Estate of Sullivan, Carroll & O’Dea assisted a beneficiary of the estate in clarifying a Heads of Agreement that was settled by the parties prior to Carroll & O’Dea being engaged.
Background
The deceased died leaving an estate mostly comprising assets of a “live” and ongoing nature.
The beneficiaries to the estate were proposed to receive dividend distributions from a number of companies that formed part of the Estate. The executor was also a director of these companies.
A beneficiary commenced proceedings under the Succession Act 2006 (NSW) to alter their testamentary entitlement. Following a mediation ordered by the court (the family provision phase of the proceedings) the parties recorded their agreement in a Heads of Agreement.
Author: Joshua Dale, Associate
Intestacy Rules for Indigenous Australians
In 2009, the New South Wales Parliament passed the Succession Amendment (Intestacy) Act (Amendment Act), an Act to amend the Succession Act 2006 (NSW) (Succession Act) and the Probate and Administration Act 1898.
Prior to the amendments, there was no separate legislative provision for the operation of the intestacy rules for indigenous people in New South Wales.
The amendments
Section 101 of the Succession Act, defines an Indigenous person as “a person who:
- is of Aboriginal or Torres Strait Islander descent, and
- identifies as an Aboriginal person or Torres Strait Islander, and
- is accepted as an Aboriginal person by an Aboriginal community or as a Torres Strait Islander by a Torres Strait Islander community.
In line with the National Committee on Uniform Succession Law’s recommendation, the Amendment Act provides “an alternative regime for the distribution, in appropriate cases, of the intestate estates of Indigenous people”, by inserting sections 133, 134 and 135 into the Succession Act. Broadly, these sections permit “The personal representative of an Indigenous intestate, or a person claiming to be entitled to share in an intestate estate under the laws, customs, traditions and practices of the Indigenous community or group to which an Indigenous intestate belonged, to apply to the Court for an order for distribution of the intestate estate”. Such application must be made within “12 months of the grant of administration” and “must be accompanied by a scheme for distribution of the estate in accordance with the laws, customs, traditions and practices of the community or group to which the intestate belonged”.
According to the Law Society of New South Wales, “Preparing a scheme for distribution of the estate will require the assistance of elders of the clan to which the deceased belonged.”
Author: Merryn Lynch, Solicitor
Retirement Village Living
Over 55 and considering retirement living? Our Patricia Monemvasitis, Partner and Brett Fatches, Special Counsel recently canvassed what to bear in mind in the Hunter Business Review September 2016.
