In April 2018, the Superannuation Complaints Tribunal upheld the decision of a retail superannuation fund trustee to pay a deceased member’s superannuation proceeds to his claimed spouse of nine months.
Aged 25, the deceased died in a worksite accident. He had never married, had no children and was survived by his parents, brother and 20-year-old claimed spouse, whom he had met nine months prior to his death. He did not leave a will.
The deceased and the claimed spouse met in January 2015, and in February 2015 they began living together with the deceased’s grandparents in their home. In October 2015, the couple moved into a caravan together and the deceased died 26 days after.
Several years prior to his death, and before meeting the claimed spouse, the deceased signed a preferred death benefit nomination form (which was non-binding) to nominate his brother as the beneficiary of his superannuation proceeds.
After the deceased’s death, at the request of the deceased’s father, the claimed spouse signed a form stating that she did not intend to make a claim in relation to the deceased’s superannuation. However, she later requested that the form be disregarded, as she had signed it prior to receiving legal advice and she claimed she was in considerable emotional distress at the time it was signed.
As no binding death benefit nomination existed, the superannuation fund trustee exercised its discretion to pay the deceased’s death benefit to the claimed spouse as his dependant, rather than to the Estate.
The deceased’s Estate requested that the Tribunal review the decision, stating that the claimed spouse should not have been considered a dependant.
The Tribunal’s decision
The Tribunal upheld the fund trustee’s decision, which was to pay the deceased member’s superannuation proceeds to his claimed spouse of nine months.
In making its decision, the Tribunal considered:
- emails and text messages between the deceased and the claimed spouse, which demonstrated the closeness of their relationship, plans for the future (including buying a house) and the ‘terms of endearment’ used with one another;
- Facebook posts and messages from the claimed spouse’s friends, which showed that they were viewed as a bona fide couple within their social circles;
- eulogies given by the deceased’s family, which indicated that the deceased was looking forward to a future together with the claimed spouse; and
- that the claimed spouse received one third of the deceased’s ashes.
The Family Law Act 1975 (Cth) requires a minimum of two years (or a child of the relationship) before the Court can make a decision regarding the division of assets. However, superannuation funds have no such requirement. Whether or not a person is considered to be a ‘spouse’ is discretionary and assessed case-by-case.
In this case, the fund’s rules defined a ‘spouse’ as ‘a person who, in the opinion of the Trustee, ordinarily lived with the Member…on a permanent and bona fide domestic basis’. The Tribunal also determined that no specific length of time was necessary in order to determine that a spousal relationship was bona fide, and that this will vary from couple to couple.
While the deceased nominated his brother as the preferred beneficiary of his superannuation in his death benefit nomination, the brother was ineligible as he did not satisfy the definition of a ‘dependant’ under the fund’s rules, or the superannuation fund regulations generally.
The Tribunal agreed that the claimed spouse was the only person who could be considered as the deceased’s dependant, and supported the fund trustee’s decision to pay the superannuation proceeds to her instead of to the Estate.
The importance of making an appropriate superannuation nomination
Members are usually unaware of how a retail super trustee will determine the payment of their superannuation death benefits (and associated life insurance benefits) if they pass away.
In the absence of a binding death benefit nomination, a superannuation fund trustee holds unilateral discretion in determining who should receive a deceased person’s death benefits. For this reason, it is important to have a valid binding death benefit nomination in place (and a will) to ensure that your superannuation proceeds are paid in accordance with your wishes.
If you would like more information and advice in relation to superannuation, asset protection and estate planning, please contact our Estate Group on (03) 8600 8885.
Note: This update is a guide only and is not intended to constitute legal advice.