VIC Benefitting from an Estate that Includes Superannuation?

[Paul O]

I am power of attorney for my sister who has a permanent disability that prevents her from working. We are in the process of investing some money for her in a Superannuation account (she is in her 40s - so well under normal preservation age).

When she dies because she doesn't have any dependents, we intend to include (in the superannuation submission) a Binding Death Nomination that will nominate for the superannuation balance (+/- insured amount) to be left to her estate - therefore the superannuation would be distributed (as her will is left) equally amongst her 3 siblings (including me).

1) if she was to die before I have reached preservation age (I am still working) will this cause any problem or restriction to me accessing my own superannuation when I reached preservation age (given I have already received money from superannuation funds?

2) given I am so involved in her financial decisions (although we have employed a Financial Advisor to give us advice whom we will employ for the life of the investments) will I potentially have trouble inheriting my proportion of her estate when she does die?

I only ask because I thought this was the case with the 'Disability Trust Fund' & whether the same applies to superannuation....

Many thanks for a reply,

 

[Smiley]

Hi Paul,

It appears you are doing this already, but ensure the binding nomination clearly states "Legal Personal Representative" or "the estate". Each Trustee is a little funny on the wording. Get it wrong and your binding nomination may be void. Even worse, it may be accepted but claim time, when the Trustee who actually review it as opposed to general office workers, they may deem it void. I would suggest emailing the Fund and asking what wording they would like you to use, then when you provide the binding nomination, attach a copy of the Trustee's email with it.

To answer your questions:

1) No. Receipt of funds from an estate is different to your own preservation. Note you will be subject to tax as you have stated your sister has no dependants, as such, this means you and other beneficiaries will receive payment as non-dependants. Your accountant can assist with the tax side of things.

2) Simple question, long answer. Hopefully, you will have no issues.

With anything, there is always a possibility of trouble with inheritance. Think of all the famous people who have big solicitors write up wills but after they pass, beneficiaries are feuding.

If all potential beneficiaries get on well, there shouldn't be any issue (touch wood).

Conversely, people could easily make an argument that you have a "conflict of interest". You are a POA, you are writing a binding nomination and you appear to be constructing the will whereby you appear to be stating you will be a (primary?) beneficiary. This would be very easy for any solicitor to rip through.

Defence.To avoid this, a statutory declaration from your sister outlining why she made the decisions she did in her will is always a good start. This state dec can be kept separate from the will with a note stating this is only to be revealed in the event of a dispute. That is, this gives your (late) sister a voice after passing (bear I mind too much info on the stat dec could work against her, not enough and the message may not be clear or strong enough).

 

[Paul O]

Smiley, thank you very much for such a detailed & coherent reply. I appreciate it.