Last will & testament

This morning I attended a meeting of wonderful estate planning lawyers, where Paul Salinas of Farrar Gesini Dunn presented a paper on two recent cases in relation to executors & administrators of deceased estates.

I won’t go into extensive detail of the cases but I wanted to highlight one point that jumped out at me from Paul’s paper.

The case Brine v Carter [2015] SASC 205 involved a complex estate with assets both in and outside of superannuation, and some of the non-super assets were properties overseas. The deceased Professor Brine was survived by both a partner and children to a prior marriage.

In case you didn’t know, your superannuation doesn’t actually form part of your estate so require careful planning to make sure it is passed to the beneficiaries you desire.

Professor Brine had made arrangements that the funds in his superannuation pension were to be paid to his estate, and distributed accordingly. Unfortunately, Professor Brine had made what’s called a non-binding death benefit nomination.

Professor Brine had expressed his wish that the proceeds of the superannuation pension were paid to his estate, and confirmed this in a later letter. When Professor Brine passed away however, the trustee of his superannuation pension proceeded to pay the benefit to his partner, as this was their usual policy.

If Professor Brine had have made a binding nomination, the trustees would have been required to follow the nomination. Where a non-binding nomination is made, a trustee has no requirement to be bound by the expressed nomination and it has been tested in court that an approach of following a policy, even if contrary to the evident wishes of the account holder, is valid.

So the take-home message is – just don’t risk a non-binding nomination. Talk to your adviser and solicitor about how you can make a binding death benefit nomination. It’s likely to save your beneficiaries time, heartache and money!