Lawyer warns on ‘epidemic of super death disasters’
Mistakes and failures with estate planning for superannuation funds are rising significantly, particularly where subsequent marriages are involved, according to one lawyer.
Argyle Lawyers managing principal Peter Bobbin – who reviewed some 500 Superannuation Complaint Tribunal decisions – says the single most common mistake is the failure to address a second or subsequent marriage.
Mr Bobbin said individuals believe it will never come up or it will never be a problem, and they therefore do not think about it. Some people do not even know about the potential estate planning outcomes that could occur.
“There is an increasingly growing epidemic of super death disasters. Particularly involving subsequent marriage relationships,” he said.
“Problems can arise in ‘blow-in’ situations where mum or dad have entered into a new relationship, perhaps their previous partner has died, and they just don’t think about the fact their new partner can claim on their super and they do nothing about it and the new partner does. Step-children can also become an element in it.”
In one of the tribunal cases, Mr Bobbin said a father had died after he had remarried and done nothing about directing where his super went and the super trustee gave 100 per cent to the father’s wife.
“The dad’s children complained on the basis that well, if she gets the money, then when she dies it’ll go to her kids,” he said.
“The tribunal said the trustees must not consider the ponderables such as how long will the second wide live for, what her financial needs may be in the future and whether or not she’ll choose to give the money to her own children or somebody else.”
Mr Bobbin said the children can end up missing out in these scenarios, with the money going to the other family.
“It is the single most ignored part of estate planning by people.”