Article of Interest on Wills & Estates

FAILURE TO PLAN

Arnold and Ann had been together for ten years. Both had been married before. Arnold had three children from his prior marriage. They opened their own business, worked hard, and accumulated a nest egg in excess of $2 million, plus their own home. They sold the business and retired.

They took financial advice invested their money in a public superannuation fund. $1.5 million was invested in Arnold’s name and $500,000.00 in Ann’s. Arnold was older than Ann and could access his super earlier. They got their Lawyer to draft a Will for each of them, leaving everything to each other. They thought the Will controlled their superannuation death benefit entitlement and made a specific gift of this benefit to each other in their Wills.

The Lawyer who drafted the Wills made three basic errors:

• He did not point out the danger leaving the children out of the Wills;

• He did not advise that the Will did not control the superannuation death benefit; and

• He did not let them know they should consider making a binding nomination which would require the trustee of the superannuation fund to pay the benefit as they directed .

Arnold died soon after making his Will. The children had…expectations – which were soon dashed. The house went straight to Ann as the surviving joint tenant. A joint bank account with $150,000.00 was the same. There was nothing left in the estate.

”What about Dad’s super?”

Ann made an application to the Trustee of the super fund that it be transferred to her. She produced the will to show Arnold’s. intentions.

The trustee of the superannuation fund decided to pay the $1.5 million death benefit to Ann. The children were like bees in a bottle. No provision had been made for them by their father. They objected to the decision. The Trustee reviewed the decision and adjusted the payment decision so that Ann would get 70% of the $1,5M and the children share equally in 30%. This would have given the kids $150,000.00 each.

Ann was ok with this and thought it fair that the children receive something from their father .The kids were not ok with it. They made complaint to the Superannuation Complaints Tribunal (SCT). Each party has to put their position to the Tribunal. The

kids wanted all the super. Ann made detailed submission setting out what she and Arnold had at the beginning of their relationship and how through business they had worked together to accumulate the super which was in Arnold’s name. She showed that the bulk of the super was Arnold’s name for retirement reasons, not because he earned more of it.

The SCT made a ruling overturning the amended decision of the Trustee, and awarded the whole of the death benefit to Ann. The children were shattered-they had missed out on $150,000.00 each.

The anguish that was created for everybody by the failure to receive appropriate planning advice resulted in a permanent breakdown in relationships; unnecessary costs and unbelievable stress.

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