A recent court decision, on a case involving bankruptcy and the death benefits of a deceased super member, has reaffirmed the protections super holds in relation to creditors and bad debts.
DBA Lawyers director Bryce Figot says in the case, Trustees of the Property of Morris (Bankrupt) v Morris (Bankrupt)  FCA 846, a bankrupt widow Debbie Morris had received two payments from her deceased husband’s superannuation.
The two payments were a $45,392.48 payment from AustSafe Super and a payment of $67,240.27 from Plum Super.
Mr Figot told SMSF Adviser the two liquidators and registered trustees, who were appointed trustees of her bankrupt estate, took Ms Morris to the federal court, claiming the AustSafe Super and the Plum Super payments should be paid to her creditors.
“What is really interesting about this is that [while] we know that if a person goes bankrupt and the bankrupt person then receives a lump sum from super ... it’s protected. What we don’t know is that if a person dies and their super benefits are paid out to someone else, who themselves are bankrupt, does the protection stand?”
The court ruled in favour of Ms Morris and against the bankruptcy trustees.
“It is quite a victory or affirmation for the kinds of protections that super gets from bankruptcy, including not just where the member goes bankrupt, but where a member is dead and it is getting paid to someone else such as a spouse who is bankrupt,” Mr Figot said.
“It’s a very positive decision for superannuation I feel.”
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