The case of Re Narumon Pty Ltd was published on 24 August, the first case in Australia to consider whether an attorney can make a binding death benefit nomination on behalf of a principal.
The Applicant in this matter was Narumon Pty Ltd who was the trustee of the John Giles Superannuation fund created in 1992. Mr Giles was the sole member for a substantial period of time until his wife Mrs. Narumon Giles and his sister Mrs. Roslyn Keenena became members of the superannuation fund. Mr Giles had five (5) children, Nicholas 19 to Mrs. Giles and four children from a previous marriage, Ms Patricia Giles, Mr Gregory Giles, Mr Anthony Giles and Ms Kelly Giles.
Mrs. Giles and Mrs. Keenan were appointed as attorneys for Mr Giles on the 5 June 2013. The attorneys were appointed for health/personal matters and financial matters. Mr Giles stipulated in his enduring power of attorney that the appointment for financial matters would only begin when Mr Giles was assessed by a medical professional with at least 10 years of experience who assessed Mr Giles as being incapable of making decisions on his own. In November 2013 Mr Giles was assessed by a medical professional as being incapable of making decisions for himself.
Due to the uncertainties in relation to the superannuation fund, Narumon Pty Ltd made an application to the Court seeking declarations be made. Mr Giles’ estate was also subject to a family provision application that was brought by one of his adult children.
As Mrs. Giles explains in her affidavit, she is seeking the declarations set out in the originating application because of uncertainty as to the appropriate steps that the applicant should take in the administration of the Fund, by reason of an issue concerning the execution of a 2007 deed of variation; missing documentation in relation to the initial establishment of Mr Giles’ lifetime complying pension, and her nomination as reversionary beneficiary of that pension; and the question whether a binding death benefit nomination signed by Mr Giles’ attorneys in 2016 is valid and binding.
Variation of Trust Deed
The terms of the John Giles Superannuation fund were varied on the following occasions:-
3. 2000 (varied by way of deed of appointment of new trustee);
5. 2007; and
The applicant sought a declaration in relation to this issue due to the execution of the 2007 variation. The issue that resulted was that Mr Giles had signed the 2007 variation deed on behalf of the trustee company only and not in his personal capacity as director of the company. The Applicant argued the 2007 deed of variation had not been executed correctly and therefore was ineffective. It was held that the 2014 deed of ratification and variation was executed to fix the problems resulting from the 2007 deed and was deemed to be effective as it does not relate to any specific clause contained in the 2007 deed.
Binding death benefit nomination
Mr Giles made the following binding death benefit nominations between the period of 2010 and 2013: –
1. 23 February 2010- Payment of 100% to Mrs. Giles;
2. 18 December 2012- 40% to Mrs. Giles, 40% to Nicholas and 20% to be divided equally between Mrs. Keenan, Mr Giles’ former wife and Patricia Giles and Gregory Giles;
3. 31 February 2013- 44% to Mrs. Giles, 44% to Nicholas Giles and 12% to legal personal representative;
4. 26 April 2013- 47.5% to Mrs. Giles, 47.5% to Nicholas Giles and 5% to Mrs. Keenan; and
5. 5 June 2013- 7.5% to Mrs. Giles, 47.5% to Nicholas Giles and 5% to Mrs. Keenan- nomination stated it would ceased to have effect 3 years after date of signature.
In affidavit material Mrs. Giles’ expresses that herself and Mrs. Keenan came to the conclusion to renew Mr Giles’ binding death benefit nomination based on Mr Giles’ past nominations as they believed they were Mr Giles’s wishes.
Whether the binding death benefit nomination signed by Mr Giles’ attorneys in 2016 is valid and binding?
The Court held there was nothing contained in Mr Giles’ fund that prohibited an attorney signing a binding death benefit nomination on behalf of a member. The Court then looked to the relevant provisions of legislation including the Powers of Attorney Act Qld 1998 under section 32 which provides that an adult may authorise one (1) or more persons to do anything in relation to financial matters or personal matters for the principal. The Court held that a binding death benefit nomination does not fall within any of the examples contained in the legislation, but it does not mean that an attorney’s powers are limited to those examples under the legislation. The applicant argued the matter was not a conflict transaction, even though the nomination was made to the benefit of both attorneys as it was argued the reason for executing the nomination was to sustain Mr Giles’ wishes in regards to the distribution of his benefits. On this basis it was held that the Court considered it appropriate to give effect to the 2016 death benefit nomination made by Mrs. Giles and Mrs. Keenan although as Mrs. Keenan was not a dependent of Mr Giles that her 5% benefit would not be binding upon the trustee.
Take away points
Clients should consider whether they wish to permit attorneys to exercise power over their superannuation fund, including the power for attorneys to make or alter existing nominations of beneficiary. Clients should consider reviewing their superannuation fund deeds and enduring powers of attorney as part of an overall estate planning strategy.
If you would like assistance with your estate planning strategy, please contact us.
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