YOUR MONEY YOUR DISCRETION

Maintaining a current death benefit nomination with your Superfund

Last week I had an “unusual” success in a matter relating to a decision by the Trustee of an industry superfund. Around three months ago, I met a lady who lost her young son in a road accident. The son was employed in the retail industry and regularly contributed to his superannuation fund. The superannuation fund advised my client (the mother) to lodge a death benefit claim form. Her late son had not left a death benefit nomination for the superannuation monies and insurance benefits and the Trustee had to make a decision as to whom to pay these monies.

Around three months after lodging the death claim form, my client received the Trustee’s decision that the superannuation monies and insurance benefits were to be paid to “a person” titled as his de-facto. My client was completely unaware of this person and asked me to assist her in objecting to the Trustee’s decision.

This article re-emphasises employed individuals to periodically review their circumstances and maintain a current death benefit nomination with their superfund at all times. This will avoid your family experiencing the anguish, legal costs and uncertainty around receiving superannuation monies and insurance benefits. We provide independent legal advice regarding matters associated with industry super fund, self-managed superfund, death benefit nominations and allied areas.

Superannuation monies

Superannuation is a tax effective way to save for your retirement. In general, you will not be able to access this money until you retire. Your employer contributes to your super fund and you can top it up with your own money.

When you pass away, superannuation does not automatically form part of your estate (a pool of the deceased person’s assets and liabilities). Superannuation monies are held in a trust and are treated differently from your other assets. Unless you have taken steps in advance to instruct the Trustee to distribute the death benefits according to your wishes, the Trustee has the discretion (subject to the relevant legislation) in making a decision how to divide it amongst your dependants.

You can nominate your beneficiaries by providing the Trustee a completed binding death benefit nomination form. Every member of a superannuation fund is expected to provide a binding death benefit nomination, which is generally valid for approximately 2 to 3 years. This document directs the superfund’s Trustee to pay your death benefit to the eligible beneficiary of your choice.

The journey ahead

I submitted a letter of objection and supporting documents to the Trustee and raised the following matters:

1. my client was granted letters of administration by the Supreme Court WA to administer her late son’s estate;

2. the deceased and my client shared an “interdependency relationship”;

3. the person titled as de-facto was a girlfriend, which cannot be equated to a de-facto relationship; and

4. the product disclosure statement published by the superfund set out that, in the absence of a death benefit nomination, the Trustee must pay the benefits to the legal personal representative of the deceased member.

I asked the Trustee to provide me with the information and documents they relied upon in making the decision that the “person” was a de facto entitled to receive and superannuation monies and insurance benefits.

An interdependency relationship exists if:

(a) two persons share a close relationship;

(b) they live together; and

Further, a person is recognised as “de facto” if:

(a) he/she has lived with the deceased for a required period of at least two years;

(b) had a commitment to have a shared life with the deceased; and

In support of the matters raised in the letter of objection, I provided the Trustee with my client’s bank statements, telephone messages exchanged with her late son, her late son’s medical bills that she paid and photographs evincing that her late son had a close relationship with her, lived with her and was financially dependent on her.

Happy ending

Nearly two months after submitting my client’s letter of objection and documents, the Trustee advised us that it had made a decision to pay the entire amount of superannuation monies and insurance benefits to my client as the legal personal representative of her late son’s estate.

Fortunately, my client could provide significant evidence in support of the matters raised in the letter of objection to receive an “unusual” positive outcome. Despite being entitled to receive superannuation monies, many families may not have substantial evidence in support of their claim for such monies leaving them with limited options. In hindsight, my client would not be required to go through the anguish and uncertainty around receiving superannuation monies and insurance benefits if her late son would have had a death benefit nomination in place with his superannuation fund.

Takeaway message

Trustees of industry superfund work for a profit, not for charity. We can help you negotiate your way through the legal complexities associated with death benefit nominations with industry superfund, self-managed superfund so you control what happens of your monies after you pass. Your family would thank you for it!

Archana Luktuke2 July 2019

Mr and Mrs Joe Bloggs contacted me to seek legal advice on a proposed commercial lease provided by the real estate agent for their upcoming coffee shop in suburban Perth.

Mr and Mrs Bloggs were being rushed into signing the proposed lease, which they were not comfortable with. They started by explaining how their friend, who runs a hair dressing salon, was provided with extensive written information and a proposed lease to review before executing it. This was in stark contrast to a small seven-page template that they received by way of a proposed lease from their letting agency. I explained to Mr and Mrs Bloggs that their friend and they are subject to separate leasing legislation, however their due diligence before signing the proposed lease will assist them in the long run. In Western Australia, leases for commercial premises can be categorised as retail leases and commercial leases. It is important to note that all commercial leases in Western Australia are not governed by the same legislation.

A summary of the safeguards that a potential lessee of a commercial lease must consider is discussed below.

Retail Leases

Retail leases are governed by Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (the “Retail Shops Act”) and are limited to premises:

(a) with a lettable area of 1,000 m2 or less;

(b) used for carrying on a business and that are in a retail shopping centre (a group of premises, 5 or more) or otherwise; and

As at 1 January 2013, 'specified businesses' are limited to:

(a) dry cleaning;

(b) hairdressing;

(d) shoe repair (which includes key cutting and engraving); and

(e) sale or rental of videos tapes, DVDs, electronic games and other similar amusements.

Any landlord, whose commercial premises is governed by the Retail Shops Act, is bound by significant number of obligations as to the information he/she needs to disclose to a potential lessee prior to executing the lease. In comparison landlords, whose premises is governed by the Transfer of Land Act 1893 (WA) and the Property Law Act 1969 (WA), are not bound by any specific obligations as to the information he/she needs to disclose to a potential lessee prior to executing the lease.

The Retail Shops Act did not apply to Mr and Mrs Bloggs proposed lease. Therefore, began Mr and Mrs Bloggs’ due diligence journey before executing their commercial lease.

Commercial Leases

The real estate agent provided Mr and Mrs Bloggs with two documents – the Commercial Lease with Annexures and General Terms and Conditions of the Lease. Mr and Mrs Bloggs were seeking advice as to whether both these documents captured the terms and conditions of the agreement between the landlord and them.

Typically, most real estate agents would fill in the details in a Commercial Lease template published by Real Estate Institute of Western Australia (REIWA) and provide it along with the General Terms and Conditions of Lease, also published by REIWA, to any potential lessee.

The General Terms and Conditions of Lease document sets out the obligations and liabilities of the landlord and the potential lessee, however any potential lessee must review whether the following key details have been included in Commercial Lease document provided to him/her:

(a) whether the potential lessee and the landlord have been accurately identified (is the potential lessee and/or the landlord an individual or a company);

(b) whether any guarantors have been included in the lease;

(d) whether any other items (such as equipment) owned by the landlord are being included with the lease;

(e) the term of the lease;

(f) whether the potential lessee has an option or multiple options to renew the lease;

(g) the amount of rent and the frequency of payment of rent;

(h) the mechanism and frequency of rent review;

(i) what are the types of outgoings that the potential lessee is to pay and an estimated amount per month;

(j) whether a security deposit or bank guarantee will be held and for what amount;

(k) permitted use of the premises;

(l) whether the landlord has obtained approvals for the intended use and signage from the local council and the strata management (if applicable);

(m) whether the potential lessee has been provided with copies of approvals for intended use;

(n) insurance requirements to be complied with by the potential lessee; and

(o) how the agreement can be terminated and what is the notice period.

Mr and Mrs Bloggs proposed lease document had the following inadequacies:

(a) incorrect details of the proposed lessee – Mrs Bloggs was named as a lessee in place of the potential lessee company;

(b) the landlord had not obtained any approvals from the local council and the strata management for the intended use and signage although the terms stated otherwise;

If Mr and Mrs Bloggs would have signed up a lease with the inadequacies mentioned above, they would have put themselves in a financial predicament as the incorrect person would have been bound to comply with terms of the lease without any approvals to run the business at the premises and with no estimate of the costs towards outgoings.

Takeaway Message

Caveat emptor – buyers (in this case potential lessees) beware:

The clear message for any individual or entity considering a commercial (non-retail) lease is to undertake adequate due diligence and seek independent legal advice before executing any commercial (non-retail) lease.

Please note that any information included in this article is general information only and does not constitute legal advice. Please contact us to discuss your particular circumstances.