Estate Planning

Ervin Katz and his wife established an individual Trustee SMSF. After his wife passed away, Ervin Katz appointed his daughter, Linda Grossman, as an additional Trustee in accordance with the ATO requirements.

After Ervin passed away, Linda Grossman appointed her husband as a replacement Trustee. Ervin’s non-binding nomination notes that his benefit was to be paid equally between Linda and her brother, Daniel. However, Linda and her husband, who are now the Trustees of the Fund, determined that 100% of Ervin’s benefit be paid solely to Linda. Daniel Katz contested in the Court the technicalities of the appointment of Linda and her husband as trustees.

However, as Linda and her husband are the Trustees of the Fund, they have control of the benefits. In addition, Ervin’s death benefit nominations were non-binding, which is no more than a consideration for the Trustee to take into account. Daniel’s arguments failed and the Trustees’ decision remained effective. To access the complete case law, please click here.

Mrs Marsella died leaving her husband of 32 years and two children from a previous marriage. When her SMSF was established, Mrs Marsella and her daughter were the Trustees of the SMSF. Upon her death, her daughter became the sole Trustee.

Mrs Marsella executed a death benefit nomination to her grandchildren in 2003. This nomination has lapsed at the time of her death. Therefore, the Trustee was not bound to distribute the death benefit to any particular person. The payment of the death benefit was left up to the surviving Trustee’s discretion, so Mrs Marsella’s daughter paid the entire benefit of the Fund to herself. Disputes arose between her husband and the two children.

The daughters decision was set aside as it was made without real and genuine consideration of the interests of the deceased Member of the SMSF.

It is the remaining Trustee’s responsibility to ensure the Member’s death wishes are adhere to. Ensuring a valid BDBN is in place at the time of death may assist in avoiding family disputes. To access the complete case law relating to Mrs Marsella, please click here.

Ronald Donovan was the only Member and Director in a Corporate Trustee Fund.

The Fund’s Trust Deed allowed both binding and non-binding death benefit nominations. Ronald made a death benefit nomination to his legal personal representative. However, the death benefit nomination that Ronald made is ambiguous and is not specifically noted as binding. The Court therefore determined that due to the ambiguous way that the nomination was worded, Ronald’s nomination is deemed to be non-binding.

If Trustees want to create a BDBN, the binding nomination must be in writing and witnessed by two individuals over the age of 18. This is in accordance with SIS Reg 6.17A and SIS Act 59(1A). To access the complete case law, please click here.

Similar to the case of Katz vs Grossman, one of the Trustees in an Individual Trustee Fund passed away, leaving the remaining Trustee to manage the Fund. Suzie, the deceased Trustee’s second wife appointed her own daughter as the second Trustee of the Fund.

Before his death, Munro nominated his beneficiary as “Trustee of Deceased Estate”. However, this term was not accepted by the Court as another way of referring the legal personal representative. Due to an incorrect wording in the binding death benefit nomination, the Court found that the nomination is considered invalid. The death benefit payment decision is therefore up to the discretion of the surviving Trustees in the Fund. To access the complete case law, please click here.

Maxwell Morris and his second wife, Patricia Morris, set up an Individual SMSF.

In the Trust Deed of the Fund, Maxwell nominated his daughters from an earlier marriage as the binding death benefit nominees. Upon his death, Patricia, the remaining Member of the Fund tried to pay all of the deceased’s benefit to herself. Although the Court found the nomination in the Trust Deed to be in favour of Maxwell’s daughters, a large portion of Maxwell’s benefit was unrecoverable due to Patricia’s bankruptcy and other expenses incurred during the court progression.

In this case, the Trust Deed of the SMSF is important in ensuring an efficient division of benefits upon the Member’s death. To access the complete case law, please click here.

Francesca and Augusto Conti were the only members and individual trustees of an SMSF. Mrs Conti passed away in August 2010, her death benefit having lapsed in April 2009.

As sole remaining trustee, Mr Conti exercised the trustees discretion to pay the benefit to himself. Mrs. Conti’s death benefit lapsed after 3 years of inception, Mr. Conti, who was the sole remaining Trustee of the Fund, has control of the benefits. To access the complete case law, please click here.

This case comprises of Anthony and Gayle (his second wife) in an Individual SMSF. 

When Anthony passed in December 2021, his son Paul was appointed as Trustee. The nominations were 50% to Gayle and 50% to his Estate. However, the nomination was held to be invalid as there was uncertainty if the rules of the deed was followed. The Trust Deed expressed that a nomination is binding if it is in writing and was given to the Trustees (plural), but the nomination was not given to Paul. 

The Court eventually removed Paul and Mark (Anthony’s replacement Trustee and other son) as Trustees of the Fund due to conflict of interest as potential beneficiaries and were replaced by independent Trustees.

To read more on this case, please click here.

The case involved Nguyen’s claim for his deceased partner Corbisieri’s superannuation death benefit.

Initially denied by the Trustee who questioned Nguyen’s status as Corbisieri’s spouse, Nguyen appealed to AFCA and successfully obtained the full benefit.

Corbisieri’s mother, acting as executor, objected, citing a text message from Corbisieri to Nguyen as evidence that their relationship had ended, which she argued invalidated Nguyen’s claim. The Federal Court reviewed the rules of the AMP Superannuation Savings Trust, specifically rules 7.10D and 1.1, which define relationship status and benefit eligibility. Justices upheld AFCA’s decision, ruling the text message did not legally terminate their relationship before Corbisieri’s death, thus affirming Nguyen’s entitlement to the benefit as they were still living together as a couple at the time of Corbisieri’s passing.

To read more on this case, please click here.