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The (not so) Super story of the financial planner, the accountant and the lawyer

In certain cases it can be possible that the Financial Planner and the Accountant may be in the firing line from the children of the deceased member whom it appears the death benefits were intended for.

Munro v Munro serves as another warning to Accountants, Financial Planners and Lawyers who are not well versed in the Self-Managed Superannuation Fund space of the dangers of assisting clients in the drawing and execution of binding death benefit nominations.

In this matter, it is possible that the Financial Planner and the Accountant may be in the firing line from the children of the deceased member whom it appears the death benefits were intended for.

Munro v Munro [2015] QSC 61 is a recent case involving a purported binding death benefit nomination (BDBN) in relation to a Self-Managed Superannuation Fund (SMSF) that was held to be in fact not binding.

The deceased member and trustee of the SMSF, Mr Munro, was a lawyer. His wife, Mrs Munro, was the other member and trustee.

Mr Munro died in 2011 and approximately two years prior to his death he executed a document titled "Binding Death Benefit Nomination" specifying the beneficiary as to 100% of his benefits as “The Trustee of Deceased Estate” with no doubt the intent that the death benefits be paid into his Will and distributed accordingly. There was provision in Mr Munro’s will for his two daughters (who were not the daughters of Mrs Munro – it was a blended relationship situation).

The SMSF Trust Deed provided that if a BDBN complied with the Deed and Superannuation Law, then the Trustees of the SMSF must follow the BDBN removing any discretion of the SMSF Trustees.

One of the relevant provisions in terms of the validity of the BDBN provided by the Deed was that the nominated beneficiary could be a dependant of the member or the member’s “legal personal representative”. In an SMSF context generally “legal personal representative” means “executor”. The term “executor” is quite often used interchangeably with the term “trustee”, however the terms and roles are distinct.

The Court found that because the word “trustee” was used in the BDBN (rather than “legal personal representative”) the BDBN was invalid and the trustees of the SMSF (now Mrs Munro and her biological daughter appointed after the death of Mr Munro and not related to him) had the discretion as to whom the deceased death benefits be paid.

I suspect that the trustees of the SMSF will not pay the death benefits to the legal personal representative or Mr Munro’s daughters! It is understood that the deceased’s accountant and financial planner had input into the BDBN.

One often overlooked part of the decision was a view expressed by the Court which implied confirmation of the ability of a BDBN in an SMSF context to last longer than 3 years. However, given all of the circumstances of the decision, such a view should not be seen as conclusively binding in all circumstances.

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