The payment of death benefits from super funds continues to cause confusion and problems for survivors.

Two cases, handed down in late 2015 from South Australia are quite interesting and add to our level of knowledge about this important but often misunderstood area.

The two cases involved the deceased estate of Professor John Brine, who lived in Adelaide and had died in December 2012.

One case involved real estate and other assets that Brine owned, while the other case involved his super monies.

At the time of death, his recognised de facto spouse was Norma Carter. He had three adult sons from a prior marriage. All four were co-executors of Brine’s deceased estate, which was estimated to be worth more than $5 million in net assets.

Brine’s Unisuper accounts

Based on the court decision, it would appear that all of Brine’s super money was held in the Unisuper Super Scheme, which is a fund set up for all university employees.

At the time of death, Brine was semi-retired and had elected to take part of his super money as an indexed lifetime pension. After he died, this pension was automatically paid to Norma Carter as his recognised spouse and will be paid for as long as she lives. Once she dies, there will be no further money paid from this pension. There was no dispute about this pension.

With the remainder of his super money, Brine had invested in a Flexi Pension, which is the name Unisuper gives to an Account Based Pension. At the time of his death, the account balance was about $545 000.

Brine’s Will And Flexi-pension

Brine asked Unisuper to commence the Flexi-pension in January 2001. In his application form, he indicated that he would like these proceeds in the pension remaining on his death to be paid to his estate. In that communication, he nominated Norma Carter as his de facto spouse. He also mentioned his intentions in a covering letter and in another letter he wrote to Unisuper in April 2001.

It’s important to note that in January 2001, the Unisuper fund didn’t allow Binding Death Benefit nominations – that is, directions from members as to how they want their monies paid out of the fund on death. (Technically, these had been allowed under the legislation since May 1999.) It finally allowed for this on 1 November 2004.

In March 2008, Brine made a will that gave Carter a life interest in some of the properties he owned and on her death, they would be distributed to Brine’s children and grandchildren. The rest of his assets he left to his sons and grandchildren. Carter witnessed this will. In May ’08 he made a will involving a property he and Carter owned in France but this isn’t relevant here, again, giving her a life interest and then on her death, reverting to his sons and grandchildren.

In summary, we find ourselves with a super investor, who has indicated via an application form, his will and other communications that he would like certain assets to be paid to his children and grandchildren. The documents on which this information is conveyed to Unisuper were quite old – that is, some of them were made more than 10 years before he died.

Brine seemed quite keen to ensure his children and grandchildren were the beneficiaries of his wealth on his death. In my experience, university professors are quite good at working out how the world works.

A key unanswered question is – why did Brine assume that a mere indication to the Unisuper trustee was adequate when between early ’01 and his death, over 10 years later, the fund would have told him, presumably several times, that he could complete a Binding Death Benefit Nomination that would have enforced his wishes on the trustee?

Carter’s initial conversations with her fellow executors

After Brine died, Carter investigated his superannuation assets by calling Unisuper. There is a dispute as to when and how she conveyed information about Brine’s money.

I would be the first to admit that super and trust law aren’t easy to understand and often the average layman doesn’t grasp the full understanding of various words and concepts used.

That being said, the Court found that from mid-December 2012 and early March ’13, Carter misled her co-executors in not explaining that the Unisuper Flexi-pension could be paid to them as Brine’s dependants or his deceased estate.

The Unisuper decision

From early March ’13, the Brine sons had worked out for themselves their entitlements and applied for the Unisuper benefit as executors. At that point, Carter applied on her own behalf and stood aside from those executorial decisions on this issue.

One of the Brine sons was told that although Unisuper’s trust deed allowed death benefit payments to a deceased estate, it typically paid to dependants if any survived the deceased.

Unisuper initially decided to pay Carter the death benefit. Even after several challenges of this decision by the Brine sons, this decision remained unchanged.

The Super Complaints Tribunal when it reviewed the case said that it was clear to them that Carter was Brine’s dependant.

That is, Carter ended up with the Flexi-pension money, even though it would appear that Professor Brine would have preferred another solution.

The SA Supreme Court decided this was the right decision.

Who paid the costs for these cases?

In relation to the court case involving the super benefit, the Brine sons were order to pay 50% of Norma Carter’s costs. For the other court case, Carter was ordered to pay some of the Brine children’s costs and vice versa.

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