Legal Hypothetical: Estate debts and superannuation

 

KEN makes a will leaving his estate to his spouse, Joan and he makes a binding death benefit nomination, relating to his superannuation fund, with the effect that his substantial superannuation passes to his children.

After Ken’s death, Joan seeks legal advice regarding Ken’s estate.

Joan is concerned that although she receives Ken’s automotive business under his will, she is aware that there are a number of creditors that had been pursuing him.

The solicitor advises Joan that as executor, she has a duty to pay Ken’s debts, which in this case, primarily arose from his business, which he conducted as a sole trader.

Joan is also advised that if she wishes to continue to run the business, she is able to pay the debts herself.

Unfortunately, Joan does not have the funds to pay the creditors and the business is placed on the market.

In relation to Ken’s superannuation, Joan is advised that the superannuation fund is a protected asset and that creditors have no claim on the superannuation.

Joan is also advised, that because Ken’s children are non-dependent adults, they will pay a substantial amount of tax on his super, which could have been avoided if it had been left to Joan.

In considering whether to make a family provision claim, Joan is advised that, unlike the law in other states, she can make a claim on Ken’s superannuation.

Joan is also advised that 95% of these types of claims settle at mediation for around $200,000 and that the solicitor would be prepared to be retained on a “no win no fee” basis in the circumstances.

Thank you to an anonymous reader for requesting that I address some of the subject matter raised in this column.

If YOU would like a particular issue addressed, please email Manny at [email protected] or call him on (02) 6648 7487.

 

By Manny WOOD, Solicitor

Leave a Reply

Top