Scott Hay-Bartlem, partner at Cooper Grace Ward Lawyers, says legal advisers need to question who benefits if children request their parents’ super to be withdrawn while they are still alive.
“[You can ask] why they are doing it, and the answer may be because their mother is going to die next week and if it stays in the fund there will be death benefits tax they would rather not pay,” Hay-Bartlem said.
“I can tell you that this call will come about 3.30 on a Friday afternoon, in a panic, because Mum has been rushed off with a stroke, and you are being asked to pull all the money out of super before she dies. Inevitably, there’s a Monday morning email that says, ‘good news, mum recovered’, but now all her super has been taken out.”
Hay-Bartlem said this is one of the scenarios in which there are myriad conflict-type issues which legal advisers should be aware of.
“There are things like reviewing death benefit nominations, attorneys taking money out of super and giving it to other people, and attorneys receiving benefits even where the person is signing themselves.”
“There are a few questions that need to be considered, one of which is: can attorneys do things about different types of conflict provisions?”
Regarding clients who want to transfer assets or money from parents to children, Hay-Bartlem noted that one of the key considerations is that even if the parents agree to the request, there may be presumptions of undue influence under the Powers of Attorney Act, particularly when attorneys are involved in the transfer of assets.
“We need to be very careful. You can apply to the court for the court to approve as a last resort. People say to me, ‘Oh, who will care?’ And my answer will be the child, your sibling, who’s now not getting anything under the will because you’ve now got a mum’s assets in your name.”
“That’s the kind of place where we can start challenging things and I see people wanting to do it, even with the best of intentions, to suddenly find out they can’t.”
There are many legal cases where trustees of family trusts have made decisions such as removing assets and have been pursued by trust beneficiaries who contend that those assets belong in the trust.
“There is also a long line of cases where directors can’t go and do things in conflict with their position as directors of a company,” he said.
“Attorneys have an enduring power of attorney, so workarounds can include things like getting informed consent, having a conflict clause, which is well drafted in wills. We’ve got husband and wife wills, and they’re appointing each other as executors, and they want each other to get their super.
“You go back to those executive conflict cases, where they say, ‘I intend my spouse to get the super. She can claim it, even though there may be a conflict’. We’ve had to tell people not to take on roles because they will have a conflict, and they won’t be able to do the types of transactions they want to do. There is a presumption of undue influence where an attorney benefits.”
