6 May 2021These days, most people have superannuation. Indeed, some people have hundreds of thousands, if not millions, of dollars in superannuation. Not surprisingly, when such large amounts of money are involved, conflicts often arise over what happens to a deceased person’s superannuation death benefit.
One such conflict arose in the 2018 case of Burgess v Burgess, which had to be resolved by the Supreme Court of Western Australia. (See Denise Hilda Burgess as administrator of the estate of Brian Michael Burgess v Burgess [2018] WASC 279.)
Unforeseen complications of dying without a will
At the core of the case was the dilemma of Mr Burgess dying without a will. He was survived by his wife, who was also the administrator of the estate, and by two young children.
As there was no will, the fate of his estate came under the relevant intestacy laws, which state that Mrs Burgess and her two young children were entitled to an equal share.
Here is where the point of contention lies. If Mrs Burgess could directly claim her husband’s superannuation death benefits for herself, the entire funds would be hers to do with as she wished.
However, if Mrs Burgess was obliged to claim the death benefits for the estate, the benefits would have to be shared equally between herself and her two young children.
Court rules there is conflict of interest
The Supreme Court of WA decided that a conflict of interest existed between Mrs Burgess acting personally in relation to the death benefits of Mr Burgess, and her acting in the capacity of administrator of the estate.
Further, the court held that the conflict of interest must be resolved by Mrs Burgess claiming death benefits for the estate, rather than for herself personally.
Accordingly, Mrs Burgess was required to account to the estate of Mr Burgess for the death benefits she claimed for herself while she was the administrator of the estate.
Why your will needs to specify your exact wishes
This case highlights just how easily conflicts of interest can arise for the administrator of the estate of a deceased person, especially where superannuation is involved.
The matter also shows how important it is to document your estate planning intentions properly in a carefully drafted will, appointing independent persons as executors and including a Death Benefit Nomination.
