The Supreme Court of Queensland handed down its decision in McIntosh v McIntosh on 16 May 2014. The Court was required to consider whether an administrator of the estate (being the mother of the deceased) was required to account to the estate for proceeds of superannuation death benefits she had received from her son’s superannuation funds. The Court was also required to consider whether the deceased’s mother had breached her fiduciary duties as an administrator of the estate.
The deceased (James McIntosh) died on 14 July 2013. On 12 September 2013 the deceased’s mother (Elizabeth McIntosh) applied to the Supreme Court of Queensland for an order to administer the deceased’s estate. The deceased died without leaving a will (this is known as an intestacy).
During the course of the administration of the deceased’s estate, the deceased’s mother had applied for payment of the deceased’s superannuation entitlements to three superannuation funds in the amounts of $234,282.35 held by Hostplus, $184,190.94 held by Hesta and $35,275.40 held by Intrust Super. The assets of the deceased’s estate (apart from the above superannuation) amounted to approximately $80,000.00. During the course of the application by the deceased’s mother for the deceased’s superannuation death benefits, the deceased’s father sought to obtain information about the deceased’s superannuation death benefits and directions from the deceased’s mother (in her capacity as the administrator of the estate) about whether she intended to apply for the superannuation proceeds to be paid into the deceased’s estate.
The deceased’s mother then filed an application for directions from the Supreme Court.
The Court considered the importance of the office of the personal representative (also known as executor or administrator appointed by the Court) and whether a conflict of interest existed between the deceased’s mother (in her capacity as administrator) and her personal capacity.
Atkinson J held:
“In this case there was a clear conflict of duty and interest contrary to her fiduciary duties as administrator. When the applicant [mother] made application to each of the superannuation funds for the moneys to be paid to her personally rather than to the estate, she was preferring her own interests to her duty as legal personal representative to make an application for the funds to be paid to her as legal personal representative. She was in a situation of conflict which she resolved in favour of her own interests. As such she acted …..in breach of her fiduciary duty as administrator of the estate.”
The Court found that the deceased’s mother was required to account to the estate for the benefit which she gained for herself in breach of her fiduciary duty. In this case it meant that the deceased’s mother was required to transfer the whole of the payments received from the three superannuation funds from herself to the estate of the deceased.
The Court also distinguished between the discretion that must be exercised by a trustee of superannuation fund when a non-binding death benefit nomination has been made as opposed to the trustee’s duties when a binding death benefit nomination has been made by a member.
As noted in the first paragraph of the Court’s decision:
“this decision deals with an area of law which has growing practical importance in view of the growth of personal superannuation: how should the legal personal representative of a deceased person deal with the entitlement to payment of the deceased person’s superannuation upon death.”
In this matter, the combined amounts held by the deceased in his superannuation funds far outweighed the amount held within his estate. Given the growth in superannuation fund values that are constantly being reported in the news, the treatment of superannuation death benefits by the Courts in the context of an estate are likely to be cause for concern for willmakers.
The case illustrates that even in circumstances where the size of an estate may appear insubstantial, a will is still important. If a will had been prepared, this may have dramatically changed the outcome that occurred.
Whilst there appears to be no end of self directed will making options available to clients, the case serves as a timely reminder of the importance for clients to obtain tailored legal advice from a solicitor about their estate planning.