You’ve worked hard, saved and invested wisely. Now serious thought must be given to how your hard earned wealth should be distributed on your death.
With the current emphasis on ensuring that we have set aside enough for retirement and a little help from the share and property markets, the value of our estates has sky-rocketed in recent times, increasingly being valued in the millions of dollars and beyond.
With this increased value comes increased responsibility in ensuring that our estates are distributed fairly and in accordance with our wishes. At the same time, for tax and asset protection reasons, more of our wealth is being accumulated in superannuation.
Because self managed super funds are required to have at least two trustees, it has become all too common to appoint an eldest child or other family member as trustee of a superannuation fund on the assumption that they will act in accordance with your wishes.
The case of Katz v Grossman  NSWSC 934 exemplifies why this may not be the best course of action. In that case, the father appointed his daughter as co-trustee with him of his super fund prior to his death. On his death, she became the sole trustee of the super fund.
She then appointed her husband as co-trustee and paid the whole of his super monies to herself, despite the fact that the father had left express instructions in the form of a non-binding nomination of beneficiary that his super monies should be divided equally between his son and his daughter.
The son received none of the super monies and (perhaps not surprisingly) took legal action to challenge what his sister had done.
Unfortunately for the father and the son in this case, the court was unable to give effect to the father’s express wishes that the super monies be divided equally between his two children. As is the case with most super funds, the trustee of the father’s super fund had a discretion to pay the super monies on death to any one or more of a limited range of beneficiaries (e.g. his spouse, children or dependants), with the result that the court had no alternative but to uphold the right of the daughter and her husband to pay the whole of the super monies to her.
The courts are faced with an ever-increasing number of estate and super fund challenges of this kind.
To ensure that your super monies end up where you want them to, it is important that you obtain advice from someone who understands the mechanisms and strategies that can be used to ensure that your wishes are carried out.
David Whitehill is a Partner at Clewett Corser and Drummond Lawyers.