Binding Death Benefit Nominations: Traps to Look Out For

Headshot of Nick Hawkins - Solicitor at Everingham Solomons TamworthA Binding Death Benefit Nomination (BDBN) is a document that allows you to decide who will receive a benefit from any Superannuation you have accrued at the time of your death. Making a BDBN is an essential part of estate planning. A lot of people are not aware that their superannuation will not automatically be distributed through their Will. If you have seen a solicitor to create or update your Will, it is also worthwhile making a BDBN.

There are three main traps to look out for when making a Binding Death Benefit Nomination:

1. Make sure the nomination you have made is in fact binding. Superfunds will often offer binding and non-binding options. If you only have a non-binding nomination your superfund is not bound to follow your directions and they can use their discretion to decide how your superannuation is divided among your family. If you want to take the decision out of the hands of your superfund and ensure your wishes are followed, check the type of nomination you have made to confirm that it is binding.

2. The second trap of BDBNs is that they often lapse every three years. Some superfunds do offer non-lapsing nominations that are also binding. However, just like making a Will, your BDBN also needs to be reviewed every few years. A Binding Death Benefit Nomination that has expired is not enforceable, so it is important that you actively review the nomination and keep it up to date.

3. Not everyone is eligible to be nominated as a beneficiary of your superannuation. You can only nominate someone that is:
a. a dependant;
b. someone who is in an interdependent relationship with you (such as a partner or spouse);
c. your children, including:
i. stepchildren (provided the relationship between the child and their natural parent is not severed by death or divorce);
ii. adopted children; and
iii. adult children; or
d. your legal personal representative (such as the executor of your Will)

If you nominate your legal personal representative your superannuation will be directed to your executor(s) who must distribute it in accordance with your Will. This is the only way to direct your superannuation to someone that does not fall into one of the above categories.

When you make your BDBN your superfund will not know if the people you have nominated fit into one of these categories and will automatically assume you have made a valid nomination. Only once the BDBN comes into effect will the superfund consider your nominations. Anyone nominated that does not come under one of the above categories cannot receive a benefit from your superannuation and your nomination will be invalid.

If you need assistance or advice regarding Binding Death Benefit Nominations or other estate planning issues contact a solicitor at Everingham Solomons because Helping You is Our Business.

Click here for more information on Nick Hawkins.

Skimping on a Will now may cost a small fortune later

Headshot of Lesley McDonnell - Senior Associate at Everingham Solomons TamworthWhen people seek to make a homemade Will ‘on the cheap’ without professional advice, it can cause additional stress and anxiety for the Willmaker’s family if a dispute arises as to the meaning of the Will with associated costs of litigation to resolve issues depleting the estate. A recent case serves as a timely reminder of why expending time and money on a professionally drawn Will now “is a sound investment” for the future.

The deceased died in 2017. The deceased was survived by her husband and her two children. The deceased left only a modest estate. When she died, the deceased left a homemade Will. By her Will the deceased sought to make a gift of a particular residence with a direction that the residence was not to be sold “until majority of the residing tenants agree to the action. I wish my children to remain in abode as long as it is deemed reasonable” (‘the first clause’). After making a number of other gifts, a subsequent clause in the Will empowered the Executor to sell assets in the estate on such terms as he considered expedient (‘the subsequent clause’).

As the Will was not clear and the beneficiaries adopted different positions on what they viewed the Will to mean, the Executor applied to the Court for directions as to the proper interpretation of the Will.

The Court observed that the subsequent clause of the Will was quite difficult to reconcile with the rest of the Will. Having made quite specific directions in the first clause of the Will, the subsequent clause appeared to get the Executor to ignore the first clause of the Will entirely. On the face of it at least, the Court observed “it was not possible to reconcile” the first clause with the subsequent clause of the Will.

After undertaking a review of the rules to be applied when construing a Will, the Court ultimately determined there was “no alternative” but to conclude that the first clause of the Will was void for uncertainty. When the wide ambit of the subsequent clause is added in “it is simply not possible to give a construction of this Will which makes sense”.

The consequence was a partial intestacy which resulted in the share of the deceased’s husband in the estate being enlarged by the addition of the gift of the particular residence that failed in the first clause of the Will.

Where the Court has to determine the proper interpretation of a homemade Will, “there is no doubt a good part of the estate will be consumed in a contest over the meaning of what by any measure is a difficult document. It is invariably the case that money spent on having a Will professionally drafted is a sound investment”.

At Everingham Solomons we have the expertise and experience to assist you in making a Will that deals with your particular circumstances because Helping You is Our Business.

Click here for more information on Lesley McDonnell

Out of Time Family Provision Claims

In New South Wales the Succession Act provides that an eligible person must commence Court proceedings for provision out of the Estate of a deceased person within 12 months from the date of death.

If proceedings are not commenced within this time then the Claimant will be met by a defence that the claim is statute barred and should be dismissed.

Under Section 58(s) of the Act the Court has discretion to extend the time for making an Order. Such extension is granted only upon sufficient cause being shown, often where there is no prejudice to the Estate, and where the delay is explained by the person challenging the Will.

A case that considered extensions of time in the New South Wales jurisdiction is the case of O-Brien v Luscombe. In this case the Supreme Court was asked to consider a claim for provision when the claim was brought 8 years after the time to bring a claim had expired.

In this case the Court considered four general questions to be considered when determining whether to extend the time limit.

1. Is it a strong claim with sufficient merit?

2. Is there any prejudice to any beneficiaries that have already received an interest from a distribution from the Estate (including any real expectations in relation to property)?

3. Is there a reasonable explanation for the delay in bringing the claim?

4. Is there any unconscionable conduct by any other person?

Any attempt to extend the limitation period will be considered on its individual facts. If an out of time Claimant is able to enliven the jurisdiction by extending the time this does not necessarily mean that a claim will succeed. A Court if it is to allow an eligible person to make a claim out of time would then need to satisfy itself of two questions:

1. Has the Applicant, been left with adequate provision for his or her proper maintenance, education and advancement in life? And if not,
2. What provision ought to be made of the Estate of the deceased in favour of the Applicant?

If you require specialised advice in respect of a potential claim involving a Will, Everingham Solomons, has the expertise to assist you with respect of such claims, because Helping You is Our Business.

Business.

Click here for more information on George Hoddle.

The Forgotten Grandchild and Contested Estates

The death of a loved one can be an upsetting and difficult time. This can be particularly so if a person feels they have been inappropriately left out of the deceased’s Will. In our experience, grandchildren can often have very significant relationships with a deceased grandparent yet they may be left out of their Will. Fortunately, there is a way by which a grandchild can seek to receive a share of the deceased’s Estate.

The Succession Act provides a means by which an “eligible person” can apply to the Court seeking an order that they be given greater provision from a deceased’s Estate. Eligible persons include people like spouses and children of deceased persons. However, determining whether a grandchild is an “eligible person” is a bit trickier.

A grandchild can only be an “eligible person” if they were “wholly or partly dependent” on the deceased person “at any particular time”. Alternatively, a grandchild may be an “eligible person” on the basis that they were a person “with whom the deceased was living in a close personal relationship at the time of the deceased’s death”.

Determining whether a grandchild satisfies one of the above conditions requires a detailed investigation into the nature of the relationship between the grandchild and the deceased, as well as a consideration of previous cases decided by the Courts.

If you are a grandchild and you are concerned that you have been inappropriately left out of a deceased’s Will, then please arrange an appointment with Everingham Solomons Solicitors. We understand the sensitive nature of these situations. We pride ourselves on giving honest and direct advice so that you can understand your legal position in these emotional circumstances, because Helping You is Our Business.

Click here for more information on David Southwood.

When is enough ever enough?

Recently we wrote about adult children seeking to contest their parents will. Whilst an adult child may assert “as of right” that a parent is bound to treat children equally in their will, that is not an automatic right as the following case from last year illustrates.

A mature aged adult son, with a reputation for being “a spendthrift of sorts” sought to make a claim against his mother’s estate at the expense of his only sibling despite the fact that his mother by her will, left him a property in excess of $1.2 million coupled with several years’ annuity of $66,000, but he wanted more.

As a child of the deceased, the son qualified as an “eligible person” to apply for a family provision order against his mother’s estate. When she died, his mother left an estate with an estimated value of over $6 million.

When his mother and his late father were still alive, the son took what was described as an early “inheritance in the form of substantial parental assistance, from time to time, as he encountered crises in life (with a divorce, involvement in court proceedings, and subjection to disciplinary proceedings affecting his entitlement to practise his chosen profession)”. “Having received his inheritance, and (not for the first time) fallen on hard times, the plaintiff looks to his mother’s estate (more particularly, the defendant’s inheritance) for relief against pressing debts and for a larger share of the estate”.

To succeed in his claim, the son was required to establish that he has been left without “adequate provision for his maintenance, education and advancement in life” from his mother’s estate and that further provision “ought” to be made for him from her estate. In his application the son sought a further $1 to $1.5 million from his mother’s estate to which the court noted such an “ambit claim suggests that he has a misplaced sense of entitlement”.

In undertaking a review of previous wills made by the deceased, the court noted throughout her son’s adult life “the deceased accommodated his claims of necessity on her generosity; but she remained mindful of her desire, by her will, to even up the scales as between” her son and daughter.

Ultimately the court determined the son failed to establish that he had been left without adequate provision for his proper maintenance, education and advancement in life out of the estate and his application was dismissed.

At Everingham Solomons we have the expertise to assist you with all matters relating to family provision claims, because Helping You is Our Business.

Click here for more information on Lesley McDonnell

Claims by adult children in contested Wills

As a child of the deceased, a daughter or son of the deceased is deemed to be a person eligible to bring a claim under the Succession Act which allows for eligible people to make an application to vary the Will. In NSW a claim must be made within 12 months of the date of death.

There is an emerging predisposition on the part of Judges of the Supreme Court that adult children bringing a claim for further additional benefits from the Estate, which their claims may be dismissed entirely or otherwise the provision made for them will be made in a paltry amount.

This is particularly true when a Court looks at the conduct of the adult children towards the deceased when assessing what weight to give to the deceased’s intention to deliberately leave adult children out of their will.

The starting point of the Act is that the freedom of the person making the Will is the foundation principle and that consideration and proper respect must therefore be afforded to a capable testator’s judgement. A Court cannot simply “ride roughshod over the testator’s intention.”

There is no rule or principle that the deceased has an obligation to make provision for an adult child. Neither is a testator required to look after a child for the rest of the child’s life into retirement.

In circumstances where there is evidence that the child has been callous, hostile or indifferent towards the deceased the Court will not look favourably on the clear intentions of the deceased in favour of adult children.

In cases of small Estates, where there is a surviving widow, it is sometimes deemed appropriate that no provision be left for the adult children at all.

An adult child cannot presume to have an automatic right to a share of the estate of a parent. Nor does an adult child have an automatic right to parity as between his and her siblings, as was found in the case of Revell v Revell.

At Everingham Solomons, we have the expertise to assist you with respect to such claims, because Helping You is Our Business.

Click here for more information on George Hoddle.

Fisking up your Will.

Like most people do when they find themselves with a spare 5 minutes, I was scrolling through my social media feed recently and I came across some marketing material for ABC’s upcoming show Fisk. Now I’m in no way part of the Fisk marketing team, but for context, the show will revolve around a Law Firm which practices in Wills and Estates.

The video in question showed some snippets from the show along with asking the cast if they had a Will in real life. Of the six Cast members that were asked, only one confirmed that they had a Will.

The others said things like “it’s kind of a complicated process”, “I probably should” and “I’m too busy living”.

It got me thinking that this is probably the general thinking when it comes to Wills.

So in attempt to dispel the notion that getting a Will prepared is horribly complicated and time consuming, I thought I’d break down the general process.

The first step in this process is sitting down with a Solicitor to give instructions. In this appointment, the Solicitor will ask questions with respect to your assets, liabilities and family members. This is an important part of the process so that we can give you appropriate advice with respect to how your assets will transfer and if there is a possibility of future claims against, and any risks for your estate.

There will also be a discussion about Executor/s and Executrix/Executrices, they are the people who will manage your estate. The Solicitor will discuss with you the role, practicalities and importance of nominating an appropriate person/s.

Its then time to discuss and for you to advise who you want to be the beneficiaries of your Estate. You can nominate specific gifts, break the estate into parts or elect to deal with your Estate as a whole.

If required, the other important thing that you will do is appoint a guardian for any minor children.

You may also wish to include funeral wishes in your Will.

Any other additional items, concerns or questions will also be addressed at this initial appointment.

Once the Solicitor has your instructions, they will prepare the document for you. They will provide you with a draft version for review. Once you are satisfied with the document, then a follow up appointment with the Solicitor is made to execute the document.

At the appointment to sign the document, you will be asked questions about your wishes and intentions. The Solicitor will take you through the document explaining the effect and if the Solicitor is satisfied you understand the document, and you confirm that the document is an accurate representation of your wishes, then you can sign your Will.

Now, if you have extensive assets or complicated affairs such as trusts, Self-managed Super funds and companies then some further enquiries and collaboration with other professionals, such as accountants, may be required. This can mean the process is a bit more complicated.

It is important to remember that Wills are not a one size fits all situation, and it is important to get the right advice with respect to your Estate. It is also important to regularly review your Will as people’s circumstances can change regularly.

If, like most of the cast of Fisk, you are in need of a Will, contact Everingham Solomons because Helping You is Our Business.

Click here for more information on Sarah Rayner.

Are you without a Will or does your Will need updating?

In continuing support of a great cause, from 22 to 26 March 2021, Everingham Solomons Solicitors are preparing professionally drafted Will packages* at the heavily discounted rate of $125 per person (or $225 per couple), with 100% of the proceeds being donated to the Westpac Rescue Helicopter Service.

Bookings are essential and can only be made online via www.rescuehelicopter.com.au/willsweek or by calling 1800 155 155 by 26 February 2021.

*applies to simple Wills only and does not apply to more advanced estate planning arrangements at Everingham Solomons’ discretion.

A Promise is a Promise

If a person makes a promise (“the promisor”) to another that s/he will obtain an interest in the promisor’s land and in reliance upon that promise, the other person then acts to his/her detriment, the law will intervene to prevent the promisor from going back on his/her word when it would be unconscionable for the promisor to do so. A recent NSW Supreme Court case has considered this legal principle known as proprietary estoppel where disgruntled neighbours sued the estate of his deceased neighbour after it was discovered that she reneged on her promise to leave them certain land by her Will.

David and his partner were neighbours of the deceased describing their property, No 70, at the time they purchased it as “the worst house in the best street”. The deceased was the owner of two adjoining properties (No 66 and No 68). The deceased resided in an upstairs unit at No 68 which had views of Sydney Harbour.

After David and his partner moved into No 70 in 2001, the deceased voiced her concerns about their plans to develop their property. It was contended that the deceased promised to leave them her houses (No 66 and No 68) in return for them looking after her for the rest of her life and agreeing not to undertake their desired building works to the extent that such works would impede her Harbour views.

David and his partner performed their side of the agreement but when the deceased died in 2015, she did not leave her properties to them in her Will as she had promised. David and his partner sued the executor of the deceased’s estate seeking to enforce their rights by estoppel against her estate.

The court found David and his partner did provide services to the deceased and altered their lifestyle to accommodate the deceased’s needs, and provided companionship and support as the deceased aged over a number of years in reliance upon her promise to them. “Estoppel by encouragement vindicates a plaintiff’s expectations when a defendant seeks unconscionably to resile from an expectation that he or she has created”. The court determined that detrimental reliance “sufficient to render it unconscionable for the deceased to resile from the testamentary promises has been established” and the elements of proprietary estoppel were made out. The court ordered the executor of the deceased’s estate to transfer the 2 properties to David and his partner.

A promise made by one person to another may be enforceable against the promisor particularly where significant steps have been undertaken in reliance upon the promise and you should seek professional legal advice. At Everingham Solomons we have the expertise and experience to advise you on your legal rights because Helping You is Our Business.

Click here for more information on Lesley McDonnell

When does a person have capacity?

Capacity is a fickle thing which Solicitors and other professionals are required to assess before a person can make certain decisions for themselves.
There are many factors which can affect ones decision making capacity; including a number of medical conditions, disability, age, and level of education.

Under Australian Law there is a presumption that an adult has their own decision making capacity.

In addition to this, there are some documents where a specific test for capacity is required. These documents usually require that a person specifically understand the nature and effect of the documents that they are signing.

Generally, this means that a person must be able to:

• Understand the facts and the choices involved with the decision;

• Weigh up the consequences and potential ramifications of the decision;

• Make a decision free from the influence of family and without coercion; and

• Communicate their decision clearly.

Remember, just because a person makes a decision that you don’t agree with, does not mean that the lacked the capacity to make that decision!

A person must have the capacity to make the decision at the time that the decision is made or effect is being given to the decision. For example a person must have capacity at the time of signing a legal document.

It is important that you think about your future while you have the capacity to do so. This might include planning for the event that you do lose the capacity to make your own decisions.

Documents such as a Power of Attorney and Appointment of Enduring Guardian can be drafted where you nominate someone to make decisions on your behalf, in the event of a loss of capacity. Unfortunately, once you lose capacity it is too late to put these documents in place.

If you wish to ascertain if you or a loved one could make a legal document or have questions about what happens after a person loses capacity please contact our office because at Everingham Solomons Helping You is Our Business.

Click here for more information on Sarah Rayner.