Self-managed super fund trustees are increasingly becoming targets of legal claims from estranged children who claim they have been unfairly excluded from an inheritance, say lawyers.
The latest landmark case involves about $4 million being paid to the biological family of a deceased member’s $18 million estate that was originally directed to a second wife through a self-managed super fund. The second wife had to pay about $400,000 in legal fees.
Matthew Burgess, a director of View Legal, a specialist estate planning company, says: “Anyone who assumes it only applies to NSW is playing a very dangerous game.”Lawyers warn that estate disputes are rising as the value of self-managed super funds tops $820 billion across 600,000 funds and more than 1 million members, according to Australian Taxation Office analysis. The average in each fund is about $1.3 million.
Andrew Meiliunas, state litigation leader for Maurice Blackburn Lawyers, says family disputes involving second and subsequent marriages constitute a “large portion” of its wills and estates work.Lawyers claim the number of couples considering divorce has skyrocketed after the COVID-19 lockdowns. The recent NSW Supreme Court decision awarded three of William Benz’s six adult children about $4 million from his SMSF despite it having been bequeathed to his second wife, Erlita.He had made a separate will, but there was nothing left in the residuary estate to satisfy bequests to the children.Justice Julie Ward ruled there was an expectation in the family that the children would share in his estate because of the terms of the will and the father’s history of helping his children.
Another key aspect of estate planning is under review by the High Court, the nation’s most senior jurisdiction, involving a blended family, an SMSF and the validity of a binding death nomination.The only daughter of a deceased father is bringing an action claiming the binding death nomination awarding his estate to a partner was invalid because it had been signed more than three years before his death. The law requires these nominations to be reviewed every three years to remain valid.
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