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03 March 2016

Super, death benefits and the trustee’s discretion – real or imagined No 2? The executor’s conundrum after Brine v Carter

The South Australian case of Brine v Carter [2015] SASC 205 is a warning to executors who wish to claim the deceased’s superannuation for themselves.

The South Australian case of Brine v Carter [2015] SASC 205 is a warning to executors who wish to claim the deceased’s superannuation for themselves.

The 2014 decision in McIntosh v McIntosh examined the conflict of an administrator in claiming superannuation benefits for herself (as opposed to requesting the proceeds be paid into the estate).  Brine v Carter considered whether the same conflict arises with an executor.

In Brine v Carter, Professor Brine died with two superannuation accounts with UniSuper. He appointed his three children and his de facto partner Ms Carter as his executors. Ms Carter applied for the death benefit to be paid to her. The other executors sought an order requiring (among other things) that Ms Carter account to the estate for the superannuation benefit she received, due to the conflict of interest caused by her being an executor of Professor Brine’s estate.

Justice Blue found:

  • Ms Carter as the executor was in a position of conflict in relation to Professor Brine’s superannuation benefits;
  • the mere fact she was appointed as an executor did not by itself mean she was authorised to act in that position of conflict in relation to the superannuation benefits;
  • as the other executors acted on behalf of the estate in claiming the superannuation benefits from UniSuper, they consented to her claiming the death benefit despite the conflict; and
  • Ms Carter was not liable to account to the estate for the benefit.

This case is in some ways consistent with, and in some ways expands, the decision in McIntosh. Advisers should consider the following points from Brine v Carter:

  • Merely being appointed as an executor is not enough to absolve a person from a conflict in claiming the superannuation for themselves (as opposed to claiming it for the estate).
  •  If a person wants their executor to receive their superannuation, they should include an express provision the Will confirming the person can claim the superannuation despite being in a position of conflict.
  •  If a person who wishes to claim the superannuation is appointed as executor and there is no provision authorising them to do so they should consider renouncing their appointment as executor.
  • If an executor wishes to claim the deceased’s superannuation benefits and there is no clause in the Will authorising this, they should preferably get the consent of the other executors or, at a minimum, ensure the other executors are informed about the superannuation arrangements and are given the opportunity to claim the superannuation for the estate.

The law about the extent to which an executor or administrator has a conflict and can claim superannuation benefits for themselves is developing. There is still some doubt about the extent to which the ‘conflict restrictions’ apply to an executor. Also, there is not yet any authority about whether a conflict of interest arises where a person has the third role of decision maker in the fund, or where there are documents in place directing benefit payments that are intended to be binding but are in fact not.

Advisers must ensure clients’ arrangements are structured so executors and administrators are not unintentionally prevented from claiming superannuation. There are a variety of steps advisers can take to ensure benefits are paid to intended recipients despite conflicts that may occur.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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