At times, even the best intentions of a deceased can be overturned by unexpected developments. But there are solutions which should be considered when a will is being drawn up.
Take the case of parents who want to equally benefit their children through their estate and through payments from their SMSF. The will and SMSF have binding death benefit nominations. But changes in the composition and value of the estate and /or super account balance over time can result in the children being treated unequally.
Then disputes result that give rise to family provision claims on the estate, including the invoking of NSW “notional estate” rules. When this occurs, the amounts paid out of the deceased’s super ended up being greater than gifts made under the will.
One solution to stop this occurring is for a parent to make gifts under their will, conditional on the value of the super being at least of a certain amount. That way, if it is less, then the amount of the will gift might be reduced so that a compensatory gift can be made to the child whose inheritance would otherwise be funded from the SMSF. The will could include a more general clause to enable the executors to make appropriate adjustments.
Alternatively, a parent could make a binding death benefit nomination which is subject to a condition that the value of the parent’s personal estate is at least of a certain amount. If it is less, then the amount of the super death benefit might be reduced so that a compensatory death benefit payment can be made to the child whose inheritance would otherwise only be funded from the parent’s personal estate under their will.
It would also be prudent to ensure that, in the event that a member became incapable, the person that they appoint under their enduring power of attorney is someone who would be able to work harmoniously with the surviving member(s) of the SMSF if that person took the incapacitated member’s place as a trustee or a director of the trustee.
Source: Townsends Business & Corporate Lawyers
