Case Study
The case of Katz and Grossman is an example of what can go wrong if people do not execute Binding Death Nominations with regard to their superannuation entitlements.
Ervin Katz died in 2003, the sole remaining member of a self-managed superannuation fund. After his wife’s death, he had appointed his daughter as an additional Trustee to the fund, to allow the fund to continue. Before he died he indicated in his will that he wanted to leave the money in the superannuation fund equally to his son and daughter. He did not, however, complete a Binding Death Nomination.
After his death, his daughter had her husband join as a fund member, giving them control of the fund. The daughter then refused to pay the superannuation benefit according to the terms of her father’s non-binding request set out in the will. This resulted in legal action by her brother (the son). The resulting court case involved considerable expense by way of legal fees, however it is important to note that by not operating in accordance with the father’s request, the daughter did not break the law as she had full control of the fund.
Filling out a simple Binding Death Nomination form would have ensured that Mr Katz’s superannuation benefit was paid in accordance with his intentions.