Increasingly a significant proportion of an individual’s personal wealth can be found in their superannuation. This can be particularly evident when a person dies because the amount invested in their superannuation and receivable by way of death benefit may well exceed the amount of funds in the estate. A recent Queensland case serves as a timely warning for executors and administrators of estates seeking to deal with superannuation.
In 2013 James died without leaving a Will but he was survived by his parents Elizabeth and John. The net assets of James’ estate amounted to $80,000 but the superannuation death benefits exceeded $450,000. There was no binding nomination left by James so the trustees of the superannuation funds were obliged to pay the benefits to the legal personal representative or to James’ dependant or dependants.
Elizabeth made application to the Court to be the administrator of James’ estate. In the application Elizabeth deposed to a high level of conflict between herself and John and said as a result she did not believe that a joint grant to them of Letters of Administration was workable. Elizabeth deposed that she understood that, if she were appointed administrator of her son’s estate, she was required to collect her son’s assets and pay his liabilities as soon as possible and distribute his residuary estate equally between herself and John. Elizabeth further deposed “I propose faithfully to do this”.
Against this background Elizabeth applied for and received $453,748.69 in superannuation benefits personally. John contested this payment which resulted in the matter going before the Court for resolution. In essence Elizabeth argued that she should be entitled to retain the benefit of all of the superannuation paid to her while John argued that Elizabeth should be required to account to the estate for those monies.
The Court determined there was a clear conflict of duty and interest contrary to Elizabeth’s fiduciary duties as administrator of James’ estate. “When the applicant made application to each of the superannuation funds for the moneys to be paid to her personally rather than to the estate, she was preferring her own interests to her duty as legal personal representative…She was in a situation of conflict which she resolved in favour of her own interests… The failure of the applicant to apply for payment to herself as legal personal representative was in breach of her fiduciary duty to act in the best interests of the estate, for which she may be held liable by the court”.
Accordingly Elizabeth was ordered to pay the superannuation monies back to the estate.
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