Super events

SMSF ASSOCIATION NATIONAL CONFERENCE 2022

The SMSF Association National Conference 2022 returned to a faceto-face format for the first time in two years. Around 900 delegates travelled to Adelaide to physically reconnect with their industry peers.

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1: Meg Heffron (Heffron). 2: Peter Burgess (SMSF Association). 3: John Maroney (SMSF Association). 4: Julie Dolan (KPMG). 5: Dylan Parker and James Norton (The Paper Pilots). 6: Belinda Aisbett (Super Sphere). 7: Deborah Kent (Integra Financial Services) and Louise Biti (Aged Care Steps). 8: Irene Guiamatsia (Investment Trends). 9: Bryce Figot and Daniel Butler (both DBA Lawyers). 10: Tim Miller (SuperGuardian). 11: Marisa Broome (FPA), Phil Anderson (AFA), Simon Grant (CAANZ), Vicki Stylianou (IPA) and John Maroney (SMSF Association). 12: Jemma Sanderson (Cooper Partners). 13: Graeme Colley (SuperConcepts). 14: Andrew Lowe (Challenger). 15: Emma Rosenzweig (ATO). 16: Bryan Ashenden (BT Financial Group).

JULIE DOLAN STUDIES THE IMPACT THE NOTIONAL ESTATE CONCEPT CAN HAVE ON SUPERANNUATION DEATH BENEFITS.

JULIE DOLAN is a partner and enterprise head of SMSFs and estate planning at KPMG. New South Wales is the only state in Australia that allows for notional estates. The Succession Act 2006 (NSW) contains the rules relating to family provision claims.

This type of claim is an application to the Supreme Court of NSW by an ‘eligible person’ to ‘claw back’ specific assets into the estate. This may occur where a deceased person left no estate, the estate was insufficient to properly provide for the eligible person or provision ought not be made entirely out of the estate because there are other entitled people or special circumstances exist. The court can make a family provision order in relation to a deceased person’s estate if it is satisfied the deceased did not make adequate provision for an eligible person’s proper maintenance, education or advancement of life.

Superannuation can be included as notional property, as even though not directly owned by the deceased person, they exercised a level of control or it could have formed part of the deceased person’s estate had they exercised a power to deal with it before their death. A notional estate order extinguishes the property rights of the owner who held the property prior to the making of the order.

There is also a transfer requirement test. For the property to be subject to a notional estate order, there must have been a property transaction where the asset was transferred to someone without full consideration.

Another qualification is where the property is not eligible to be held in the estate but is still effectively controlled by the deceased. This category of asset arises because of the deceased’s omission or failure to act resulting in it not already being included in the actual estate. Therefore, a notional estate claim can include superannuation death benefits and attached insurance policies that have a binding death benefit nomination (BDBN), as the deceased could have chosen to nominate the executor or administrator of the estate, thereby assigning the benefits to the deceased estate. It also can include jointly held property and assets in family trusts where the deceased was in a position of control over the distribution of capital. There are specific time limits for a claim dependent on the intent of the deceased when the transfer was made and the degree of moral responsibility the deceased had towards the claimant.

Benz v Armstrong (2022) NSWSC 534 is a recent decision made by the NSW Supreme Court that dealt with a notional estate and the clawback of superannuation death benefits that were subject to a valid BDBN.

Dr Benz passed away leaving his second wife, Erlita, and six children to his first marriage. There were three different claims of provision made by three of his six children. The defendant to each proceeding was Erlita, who was also executor/ trustee of his estate. Pursuant to the will, Erlita was to benefit from most of his assets, including his superannuation balance of over $12 million. The super was to pass to Erlita via a valid BDBN to which she paid out the benefits to herself shortly after the family provision claims were made and before mediation was scheduled. The residue of the estate was to be divided equally among his six children. There was very little residue to divide, which Erlita acknowledged.

One of the issues that was considered by Justice Ward was whether the provision for the three plaintiffs was adequate for their proper maintenance, education or advancement of life based on the history of the family and the deceased’s testamentary intention. Also considered was whether the relevant property transactions, being the in-specie transfer of shares to satisfy the superannuation death benefit payments, were a notional asset to the estate, that is, was there a failure by Dr Benz to revoke the BDBN prior to his death and put in place a new one in favour of the executor of his estate? The plaintiffs submitted that by omitting to revoke his nomination and/or give a replacement nomination, the deceased brought himself within the provisions of sections 75 and 76(2)(a) of the Succession Act.

Justice Ward concluded the deceased’s failure to revoke his BDBN and put in place a replacement nomination was in fact a transaction within the meaning of section 76(2)(a) of the act. Therefore, the superannuation was to form part of the notional estate available for distribution based on the family provision orders.

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