It’s your loved ones who will suffer: an estate planning case study

If you believe a certain family member or loved one deserves to receive the benefits from your Estate when you have passed away, there is only one way to ensure your wishes are followed.

A recent decision of the Supreme Court of McIntosh v McIntosh [2014] QSC 99 shows how important it is that you have an Estate Plan in place. This does not only mean having a valid Will, but also ensuring that assets which do not form part of your Estate, for example your Superannuation, are provided for.

The Facts

James McIntosh passed away without leaving a spouse or children. At the time of his death James had significant superannuation entitlements in the amount of approximately $453,000.

James did not have a Will, nor had he provided binding instructions to the Trustees of his Superannuation Funds as to how he wanted his superannuation entitlements to be dealt with if he were to pass away.

James’ parents were separated and he lived with his mother, Elizabeth McIntosh, as James had disabilities and she was his primary carer. There was evidence indicating that it was James’ intention that his mother benefit fully from his Superannuation entitlements.

Mrs McIntosh was granted Letters of Administration by the Supreme Court of Queensland to administer her late son’s Estate. She acknowledged that the proceeds of her late son’s Estate were to be divided equally between herself and her ex-husband. The Estate was worth approximately $80,000.

Mrs McIntosh also wrote to each of James’ Superannuation funds and was successful in having all of James’ Superannuation proceeds paid to her on the basis that James lived with her and she was his carer. She had therefore established to the satisfaction of each Superannuation fund that she and James were in an interdependent relationship.

Mr McIntosh sued his ex-wife, claiming James’ Superannuation entitlements should have been paid to James’ Estate and therefore equally divided between both parents.

The Court’s decision

The Court had to determine whether James’ Superannuation entitlements should have been paid to his Estate, where they would be divided equally between his parents, instead of wholly to Mrs McIntosh as James’ carer.

The Court determined that:

  1. As Administrator of her late son’s Estate, Mrs McIntosh had a fiduciary duty to act in the best interest of the Beneficiaries of the Estate;
  2. As Administrator, Mrs McInstosh had an obligation to collect all of the real and personal property of James;
  3. This obligation extended to making an application to the Trustees of James’ Superannuation funds to have his Superannuation entitlements paid to his Estate; and
  4. Mrs McIntosh found herself in a conflict situation between her personal wish to receive all of her son’s Superannuation entitlements and her obligation as Administrator of the Estate to collect all real and personal property and act in the best interests of the Beneficiaries of the Estate.

As a consequence, Mrs McIntosh had to account to the Estate for the $453,000 that she had received as payment of her son’s Superannuation entitlements.

If James had prepared a proper Estate Plan, including valid Binding Death Benefit Nominations, the outcome for Mrs McIntosh would have been very different.

What does this mean for you?

Estate Planning is important for everyone and should always consider an individual’s unique circumstances. Proper Estate Planning involves much more than just the creation of a Will, as this will have no effect when it comes to dealing with property such as Superannuation.

Along with the family home, Superannuation is among most people’s largest assets. But unless it receives proper planning, it may not be applied in accordance with your wishes.

Proper Estate Planning will also provide legal protection for the people charged with administering Estates and can help them to avoid estate litigation and hefty legal fees.

For more information

To discuss the preparation of your necessary Estate Plan, please contact a member of our Estate Planning Team:

Ian Tindale, Director – email iant@redchip.com.au

Emily O’Brien, Associate – email emilyo@redchip.com.au

Phone: (07) 3223 6100

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