July 10

How Binding is Your Binding Death Benefit Nomination

testament

A recent case considered by the Queensland Supreme Court Williams v Williams & Anor [2023] QSC 90 has highlighted the importance of taking all of the required steps to ensure a binding death benefit nomination is valid and capable of giving a legally binding direction to the trustee of a superannuation fund for the payment of death benefits following the demise of a superannuation fund member.

Binding Death Benefit Nominations, if valid, will ensure that superannuation benefits are paid to a named beneficiary following the death of superannuation fund member.  There are strict requirements for the completion of Binding Death Benefit Nomination forms, and their renewal, including the categories of people who can be nominated.

However, as the case of Williams has reminded us, Binding Death Benefit Nominations must be returned to the superannuation fund in the correct manner if they are to be binding on the fund.  In that case, the superannuation fund member had completed a Binding Death Benefit Nomination for their interest in a self-managed superannuation fund.  They were one of 2 trustees of the fund.  Whilst the member trustee filed the document, they failed to deliver a copy (called service) to their co-trustee.  As a result, the nomination was not legally binding and the benefits were not paid as they intended.

October 7

Questions to consider when preparing your estate planning

  • Who you want to take care of your financial, personal, and medical affairs if you were to lose capacity by way of Enduring Powers of Attorney (financial and personal) and Medical Treatment Decision Makers?
  • Who you want to be your executor and/or trustee?
  • Do you need to consider incorporating a testamentary trust in your Will?
  • Who should have control of your business interests including your Family Trust, Unit Trusts, Companies, Self-Managed Super Funds, and Small Businesses?
  • What do you want to happen to assets owned jointly or in entities you control?
  • Who do you trust to make these decisions when you no longer have capacity or have passed away?
  • What is the most tax-effective method of transferring your assets?
  • What life insurance do you have in place?
  • Who are the beneficiaries of any death benefits associated with your superannuation fund?
  • Do you have minor or disabled beneficiaries?
  • What happens to your digital currency?
  • What happens to your digital assets such as emails and social media accounts?
  • Ensuring spouse, partner, children, dependants are looked after when you die or become incapacitated.
  • Ensuring that your pets are taken care of with relatives or charities.
  • Bequests are made to charities of your choice.
October 5

What is a deceased estate?

When a person dies leaving assets in Victoria, somebody, usually the executor of the deceased person’s Will, has to deal with the administration of the estate. Administering the estate means following the legal processes to distribute the estate as the Will-maker wanted.

The person does not have authority to deal with the assets of the Will until the Supreme Court issues a Grant of Representation, unless the estate is small. An estate is considered ‘small’ if it is around $113,000. This amount changes every year and is published on the the Supreme Court website.

The role of the executor

An executor  is a person (or sometimes more than one person) named in a Will to carry out the wishes of the Will-maker after their death. Often lawyers or specialist trustee companies are named as executors.

The executor may have to:

  • collect all the assets and have them valued, if needed
  • find out what debts are owed and pay them from the money made by selling the assets
  • arrange tax returns
  • claim life insurance
  • arrange the funeral
  • apply for a grant of probate  (they must be over 18 when they apply)
  • distribute the estate according to the Will
  • take or defend legal action on behalf of the estate.

Executors often need to hire a lawyer to assist them with some of this. The cost of the lawyer comes out of the estate.

If no executor is named in the Will

If the person who made the Will failed to appoint an executor, usually the court needs to appoint someone to administer the estate. A person appointed by the court is called an administrator (of a Will) . Often the person they choose to appoint as administrator is the beneficiary with the largest portion of the estate.

An administrator has the same responsibilities as the executor.

April 18

Testamentary capacity. What is it?

Testamentary capacity is a gauge of the mental faculties of a testator when they create their will. A testator must be of competent mind, understanding, and memory in order to make a valid will. All testators are assumed to have testamentary capacity until it is proven that they do not.

Whether or not a client has testamentary capacity is not calculated via a legislated formula but derived from case law. It has been described as requiring time, situation, person, and task specific focus on a testator’s ability to remember, reflect, and reason.

Courts have been concerned with this issues for many, many years. The cases, starting from Banks v Goodfellow (1870)  require a testator to understand:

  • what it means to be making a will;
  • the assets they have and are leaving to others;
  • the obligation owed to those who could make a claim on the estate; and
  • whether or not they are affected by a delusion that influences the disposal of their assets.

The Court determines testamentary capacity on the facts and circumstances of each case.

When taking instructions, it is prudent for lawyers to ascertain the client’s capacity and the possibility of undue influence by asking non-leading questions to determine the facts and circumstances of each case. The court suggests that where an elderly client is being cared for by someone or is residing in an aged care facility, it is prudent to ask both clients and their carers whether there is any reason to be concerned about capacity.