Invalid binding nomination: trustees should pay spouse regardless

To be confident your superannuation benefits are paid on your demise as you intend them to be, care is required to avoid an invalid binding nomination.

An invalid binding nomination will result if its language, form or means of transmission does not accord with the terms of the particular superannuation fund deed.

The Supreme Court of Queensland recently had to determine the validity of a binding nomination that was challenged on one of those grounds.

Anthony Williams died on 28 December 2021. He was survived by his second wife Gayle who he had married in 2019, as well as his two adult sons Paul and Mark who was appointed as the executor of his estate.

Anthony had a self-managed super fund which he called the Boosey Doherty Superannuation Fund, of which he was a trustee.

The initial members of the fund had been Anthony and his first wife Margaret, but after Margaret died in 2014 their son Paul became a trustee in Margaret’s place and he remained as trustee of the fund at the time Anthony died.

Paul and Mark entered into a Deed – after Anthony’s demise – to attempt to add Mark as an additional trustee of the fund.

In dispute was this appointment, as well as the effectiveness of the binding death benefit nomination Anthony had prepared and duly signed in March 2018 in accordance with the requirements of the deed as to its form, directing his death benefit to be paid 50% to Gayle, and 50% to his estate.

Paul determined the nomination to be invalid however because the paperwork had not been given by Anthony to him as co-trustee of the super fund as required by the terms of the deed.

Paul also declined to provide super fund information to Gayle until ordered by the court and resolved that by reason of Anthony’s conduct in not copying his nomination to Paul, neither Anthony’s estate nor Gayle should be paid any benefit from the fund.

Not surprisingly Gayle sought relief from the court by way of an order declaring that the nomination to be valid and removing Paul and Mark as trustees.

The contest came before Justice Glenn Martin who concluded that the binding nomination was invalid because it had not been given to Paul as trustee after it had been made because the terms of the deed required nominations to be given to all trustees.

He did not accept Gayle’s argument that the nomination could be valid so long as Anthony as one of the trustees had acknowledged its receipt because the Deed specified that “notice to one of the trustees is not notice to all of them”.

Paul and Mark were less successful though on the issue of whether they should be removed as trustees.

Justice Martin first held that Mark had not been validly added as a trustee of the fund, finding that such appointment had – also contrary to the terms of the deed – purportedly occurred before he had been granted probate of the will.

He also concluded the “behaviour of Paul … is, at least, concerning” and his decision that Gayle, should be deprived of Anthony’s entire death benefit because of his non-compliance “was “not a decision that one might expect to be made by a trustee acting rationally”.

He ordered that Paul and Mark should be removed as trustees.

What remains to be determined is whether the independent trustees proposed by Gayle – who he agreed were suitably qualified and independent – could be appointed to a SMSF of which they were not members.

Williams v Williams & Anor [2023] QSC 90 Martin SJA, 5 May 2023

source https://qldestatelawyers.com.au/invalid-binding-nomination-trustees-should-pay-spouse-regardless/

Court approves dementia will asset distribution for wealthy octogenarian

Courts have the power in many cases to make wills on behalf of people who lack the legal capacity to do so for example by reason of dementia.

The Supreme Court of South Australia was recently asked by the Public Trustee of that State for orders approving and authorising the making of a will for Ross Snoswell, aged 88.

Ross was born in 1935 and lived his entire life at his parents’ home in Largs Bay, a suburb in the north-west of Adelaide on St Vincents Gulf, until he suffered a fall in 2018.

Ross had never married and had no children, but after the fall he could not return home alone and began living with his long-term partner Margaret Gallary, having known her since his 20’s when they met at the Wonderland Dance Hall in Adelaide.

Margaret also had no children but her nephew Wayne, niece Selena and Selena’s husband Scott provided support to she and Ross over the years.

After Ross’s father died in 1971, his mother Heloise transferred their Largs Bay home  into her and Ross’s name as joint tenants, in consideration of “love and affection” without any payment from Ross.

When Heloise died in 1988 Ross became sole owner of Largs Bay property, denying his only sibling Rhonda any beneficial interest in it.

Rhonda considered legal action to gain a share the property but decided against it, not wanting to force Ross from the family home.

Rhonda herself died in 2020 and was survived by her husband, Kingsley, and their children, Pamela Crouch and David Cammiss.

Unbeknown to all, Ross had significant assets in excess of $1M including at least one other residential investment property, in addition to Largs Bay.

Following his 2018 fall, Ross was diagnosed with vascular dementia and the Public Trustee of South Australia was appointed as his administrator. In 2021, Margaret and Selena were appointed limited guardians for healthcare and in home support services.

As Ross had no will, his beneficiaries under intestacy rules would either be Margaret – if she qualified as Ross’s spouse – or his niece Pamela and nephew David in equal shares if Margaret did not so qualify.

The Public Trustee considered that given the significant size of his estate and his multi-faceted family history, it should apply to the Court for authorisation to make Ross’s will.

They filed proceedings in which Ross was named as respondent and was represented by a solicitor Mark Jordan as his litigation guardian. Margaret, Pamela and David were also parties to the proceedings.

The Court cannot make a will for someone if they have the capacity to do so themselves. Her honour, Justice Anne Bampton, agreed with the position taken by all parties that Ross lacked capacity to make a Will and was unlikely to regain it.

The court thus had the requisite power to make Ross’s will, but her honour had to consider whether any proposed will accurately reflected his likely intentions if he were in the position of having the legal capacity that he lacked.

Ross had never made any wills, but his litigation guardian Jordan swore of several discussions when Ross had expressed his desires regarding his estate.

It was clear Ross wanted to gift the Largs Bay property to Margaret, and $30,000 to his neighbour Rod Hunter.

Ross had also indicated to Jordan that he did not want Pamela and David to get anything from his estate but that Selena, Scott and Wayne should receive a benefit in recognition of the support and assistance they had provided to he and Margaret.

Because of some inconsistences in the evidence and differing accounts as to his relationship with Pamela and David, her honour concluded his feelings towards them “may have softened or mellowed over time if he had not lost testamentary capacity and was not open to influence from others”.

The Public Trustee proposed a will in which Margaret was the executor, $30K was left to Rod, $50,000 to each of Pamela and Rod, the Largs Bay property for Margaret, and then 50% of the residue to Margaret, 25% to Wayne, and 25% to Selena and Scott.

The guardian Jordan proposed a Will in which the estate went 50% to Margaret, and the remaining 50% to Selena, Wayne, and charity. A third version – put up by Pamela and David – had Pamela and David receiving the Largs Bay property, and the residue distributed as per the will proposed by the Public Trustee.

Justice Bampton determined that Ross clearly wanted to benefit Margaret and Rod as well as Selena, Scott and Wayne who had provided support, he would likely have considered  gifts to Pamela and David “equal to approximately half the value of the Largs Bay property” if he had capacity, was aware he had “ample assets” and was uninfluenced by others.

Accordingly her honour authorised a will be made  appointing the Public Trustee as executor and giving Largs Bay to Margaret. Then after the $30,000 gift to neighbour Rod, the residue was to be divided by way of 50% to Margaret, $250,000 to each of Pamela and David, and then 50% of the balance to Selena and Scott and the other 50% to Wayne.

Other states including Queensland have similar legislative provisions for wills to be made by the court when a person is unable to do for so themselves.

In the Estate of Snoswell [2023] SASC 35 Bampton J, 10 March 2023

source https://qldestatelawyers.com.au/court-approves-dementia-will-asset-distribution-for-wealthy-octogenarian/

Court approves start of further provision claim delayed 21 years

In what circumstances can an estate can defeat the rules of survivorship that ordinarily transfer full ownership of joint property to the surviving joint owner in the event of the death of the other?

The Supreme Court of NSW was recently petitioned by a beneficiary of an estate to achieve exactly that result.

Sijia Guo brought a claim for provision out of the estate of her late mother Wei Hong who disappeared in April 2001 never to be seen again. Under intestacy rules her entire estate passed to her spouse, leaving nothing for her adult daughter.

She had been born in China in 1995 to Wei Hong and her former husband Jin Hua Guo. Her parents divorced in 1999, with Wei Hong moving to Australia to rekindle a former relationship with Yong Wei whom she eventually married in March 2000.

In October 2000, Yong signed up the $470,000 buy of a home at Carlingford in Sydney’s north-west in joint names with Wei Hong and paid a 10% deposit. Wei Hong did not sign the contract – she was overseas – but advanced the whole of the balance purchase price from funds she had transferred from China.

She disappeared just after settlement of the purchase, after being dropped by Yong at a Carlingford bus stop to get to Sydney airport to take a flight to see Sijia who had stayed in China with her grandparents since her mother’s departure to Australia.

It wasn’t until 2012 that the NSW State Coroner declared that Wei Hong Guo couldn’t be found dead or alive, and 2021 that the court declared that she was no longer alive thereby allowing Sijia’s provision claim to proceed.

Notwithstanding registration of the transmission of the property into Yong’s name had occurred long ago, Sijia sought an order that the deceased’s interest in the home be brought back into the estate for the purposes of that claim.

If Sijia was successful, the entire property and rent accrued would be brought back into Wei Hong’s estate. Otherwise, only half the Carlingford property and accrued rents would be regarded as part of the deceased’s notional estate. As the value of the Carlingford property was $1.7M and accrued rents were $330,000, the difference in outcomes was significant.

A resulting trust – Sijia contended – existed over her mother’s interest in the home despite the joint tenancy by reason of the couple’s intentions.

The trust arose – so her argument ran – because her mother had no intention to hold the property as joint tenants and had contributed all of the purchase price.

The evidence submitted by both parties took two forms: financial evidence predominantly from bank statements and property documents in support of the contributions made towards the purchase and by whom, and secondly correspondence, documents and recollections in relation to the intentions of the purchasers.

Justice Francois Kunc noted that such evidence was sparse due to the time that had elapsed, and that Wei Hong was no longer available to give evidence.

Despite the passage of time, gaps in memories and documentary evidence, his honour was able to conclude that $335,000 had been contributed by Wei Hong to the Carlingford property purchase but he was unable to ascertain who had provided the balance.

Yong Wei was not a reliable witness, in his honour’s view. He rejected Yong’s claims that the deceased had contributed nothing.

Sijia submitted letters from her mother to family members at the time that spoke of the purchase where she spoke of “my new home” that “I bought”, arguing that this showed that her mother’s intention was that the property was to be “hers”.

The same correspondence however also showed that Wei Hong spoke glowingly of her relationship with Yong, perhaps indicating the property was being purchased as a benefit to of their marriage, regardless of the contributions made by either of them.

Ultimately, his honour concluded Sijia had not proved, on the balance of probabilities, the purchase was other than as joint tenants. Thus no resulting trust had arisen, he ruled.

The court rejected Yong’s additional contention that Sijia’s further provision claim against what remained in the estate should be barred by reason of delay.

Sijia’s youth when her mother disappeared, her location in China as she grew up, the duration of the police investigation and coronial enquiry, all combined to provide a reasonable explanation for delay such that it would be unjust – in his view – not to allow the proceedings to be brought, regardless of the difficulties with evidence and memories that occurred.

This case highlights the importance of intention when considering whether a property recorded as held as joint tenants should in fact be regarded otherwise, and also the barriers to claiming otherwise especially when one of the joint owners has died.

Guo v Gao (No 2) [2023] NSWSC 231 Kunc J, 17 March 2023 Read case

source https://qldestatelawyers.com.au/court-approves-start-of-further-provision-claim-delayed-21-years/