Death, Super and Conflicts of Interest

Question7

It is common that the largest asset of a Deceased’s Estate is Superannuation.  It is also becoming more common for a person to die without leaving a valid Will (intestate), particularly young people. 

Case study

In the case of McIntosh v McIntosh, the Applicant was the Deceased’s mother and the Respondent was the Deceased’s father.  James, who had died intestate (without a Will) in July 2013, was not married and had no children.  The net value of the assets of his Estate was about $80,000.00.  The superannuation was about $450,000.00.

James’ mother applied to the Court to be appointed as the Administrator of James’ Estate, which application was unopposed.   

The conflict between James’ parents arose because James’ mother was successful in having all of James’ superannuation paid direct to her, rather than into James’ Estate.  Had the funds been paid into the Estate, James’ father would have been entitled to be paid half of the superannuation interest based on the terms of the Queensland Succession Act (Schedule 2, Part 2).

The Court had to first consider what were the mother’s duties as the Administrator of James’ Estate (a Court appointed Executor is called an Administrator).  The Court noted that usually the position of Executor was determined by the Deceased prior to their death in their Will.  The Deceased would usually appoint someone they know. It is generally accepted that the appointed Executor will have a conflict of interest, because usually they will share in a large portion of the assets, being also named in the Will as a beneficiary.

The Court considered the fact that usually the Administrator appointed will be the person who has the greatest interest as beneficiary of the Estate.  But sometimes that person will not be considered by the Court because there is evidence that that person may not act in the best interests of the Estate.  The Court said that James’ mother should have disclosed in her Application to be Administrator that she intended to apply for the superannuation funds to be paid to her personally. 

The Court determined that there was a clear conflict between the mother’s duty and her interest in the Estate.  When she lodged an application to each of the superannuation funds for the monies to be paid to her personally, rather than to the Estate, she was preferring her own interests over her duty as Administrator to make an Application for the fund to be paid to the Estate.  She was in a situation of conflict which she resolved in favour of her own interests.  The Court said that an Administrator of an intestate Estate has a duty to apply for payment of superannuation funds to the Estate, not to themselves personally.

As a result of the breach of her duties as the Administrator of the Estate, James’ mother was ordered to pay all of the monies she had received from the superannuation funds to James’ Estate, which would then be distributed between her and James’ father equally (according to the rules of intestacy).

It is important that you seek legal advice in relation to your duties as an Executor or Administrator of a Deceased’s Estate, before you start collecting assets.  Had James’ mother had the appropriate advice, she might not have sought the appointment of Administrator and she could have been more than $200,000.00 better off.

For more information

McIntosh v McIntosh [2014] QSC 99

WARNING

This article reflected the state of the law at the time of publication. But the law is a living creation which is constantly changing and adapting. These articles should be treated as an information resource only and not as a substitute for specific legal advice in respect to your particular problems and circumstances.

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