Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 14 January 2017.
Karen is unfortunately involved in a car accident and passes away in her mid-30s.
Karen did not have a will. She was single and did not have any children.
She was living with her mother at the time of her death.
Although Karen’s estate was relatively small, her superannuation death benefit, which included life insurance, totalled $800,000.
Karen did not leave a binding nomination and the fund exercised its discretion to pay the whole of the death benefit to her mother, on the basis of “interdependency”. Interdependency was established because Karen paid her mother board.
This means that Karen’s father, who would be entitled to half of her estate on “intestacy”, did not receive a share of the death benefit.
Karen’s father and Karen’s brother seek legal advice regarding their prospects of success in seeking a “family provision order”, which could potentially have the effect of clawing-back the death benefit.
They are advised that they are not eligible to make a claim by virtue of being the deceased’s parent or sibling alone.
In order to make a claim, they would need to establish that they were dependent upon Karen at some stage during her lifetime or that they were living with her at the time of her death and that there was a relationship involving “domestic support and personal care”. This is not the case and they are therefore unable to make a claim.
This case highlights the importance of estate planning in circumstances where you might have few assets, but there may be a substantial superannuation payout upon your death.
Thank you to SP for suggesting this hypothetical.
If you would like Manny to address a particular legal issue, send your request to manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
