It is not an estate plan if it does not cover superannuation!

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The Court of Appeal in WA has confirmed how important it is to consider superannuation when you do your will and your will if you do a binding death nomination in relation to your superannuation. Neither should be done in isolation.

The facts are simple. Francesca and Augusto Conti were married and had a self managed superannuation fund (SMSF) of which they were both trustees and members. It was Francesca’s second marriage and she had four children from her previous marriage.

Francesca, according to her will made in 2005, wanted her superannuation to go to her children and not to Augusto and included a specific clause to that effect.

Francesca, according to two binding death nominations made in 2002 and 2006, wanted her superannuation to go to Augusto and not to children.

The problem is, neither of those wishes, whichever one was the preferred outcome, were properly implemented at the time of her death. So, it came down to who controlled the money, and that was Augusto as the surviving trustee of the SMSF.

After Francesca’s death, Augusto reviewed the deed and saw that as the 2006 binding nomination expired in 2009 and that under the terms of the deed he was free to decide who the death benefit should be paid to and he decided it should be paid to him, regardless of what the will said.

Francesca’s children challenged Augusto’s decision and lost both at first instance and on appeal. The problem they faced is that Augusto only did what he was entitled to do under the superannuation legislation and the terms of the deed.

As the proportion of wealth in superannuation and the number of blended families both increase so too does the need to have an up-to-date estate plan that includes all of your estate and non-estate assets.

Brendan Cockerill is a Business and Succession Lawyer at DDCS Lawyers, 18 Kendall Lane, NewActon, Canberra ACT 2601 and can be contacted on (02) 6212 7600 or at estates@ddcslawyers.com.au.

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