I was interested to read a decision handed down on 16 May 2014 by the Supreme Court which has provided guidance on situations where the Administrator of a deceased Estate applies for the deceased’s superannuation death benefits to be paid to them personally.

Background of McIntosh v McIntosh

The background of the case is as follows:

1. Mr JJ died intestate and did not leave a spouse nor children;
2. According to the rules of intestacy in the Succession Act 1981 (Qld), Mr JJ’s parents were equally entitled to be appointed Administrator of his Estate, and were also entitled to be distributed his Estate in equal shares;
3. Mr JJ’s mother, Mrs EM, applied for and was granted Letters of Administration on Intestacy of her son;
4. Mrs EM applied to Mr JJ’s superannuation funds to be paid his superannuation death benefits, totalling $453,748.69;
5. On 26 March 2014, Mrs EM filed an application for directions as to whether she was required to account to the Estate for these superannuation benefits;
6. Mrs EM argued that she should be entitled to retain all of Mr JJ’s superannuation; and
7. Mr JJ’s father, Mr JM, submitted that Mrs EM should be required to account to the Estate for those monies, which would then be divided equally between him and Mrs EM.

On what arguments did Mr JM and Mrs EM rely?

The Judge considered the following arguments from Mr JM and Mrs EM:

1. Mrs EM argued that although she agrees that once appointed Administrator, she had a duty to collect and get in Mr JJ’s real and personal Estate, this duty did not stand in the way of her right to compel the superannuation fund trustees to pay Mr JJ’s death benefits to her;
2. Mrs EM further argued that as the potential conflict between her duty as Administrator and her interest in receiving Mr JJ’s death benefits personally was known before she was appointed Administrator, applying for Mr JJ’s death benefits to be paid to the Estate did not form part of her Administrator’s duties;
3. Mr JM submitted that Mrs EM, in her role as Administrator, had a duty to collect and get in the assets of Mr JJ’s Estate;
4. He further submitted that Mrs EM had a duty not to let any conflict of interest occur. He stated that such a conflict had occurred, as she had applied for the payment of Mr JJ’s death benefits to be paid directly to her personally, without also submitting a claim on behalf of the Estate. She had also not informed Mr JM that he, too, could submit a claim.

What did the Judge consider?

The Judge considered the following questions:

1. What are the duties of an Administrator which are relevant to this case?

The Judge summarised that the appointment of an Administrator is made by the Court for the due and proper administration of the Estate and the interest of the parties beneficially entitled to distributions. The Administrator has fiduciary duties to act in the best interests of the Estate and to collect and get in all the Estate’s assets.

The Judge also found that an Administrator of an intestate Estate has a duty to apply for payment of superannuation funds to the Estate.

2. Did Mrs EM apply for the superannuation death benefits to be paid to her personally before or after she was granted Letters of Administration?

The Judge found that Mrs EM did not apply to any of Mr JJ’s superannuation funds for his death benefits to be paid to her until after she was granted Letters of Administration. This means that she had made the applications after she had acquired the duties of an Administrator, as detailed above.

3. Did Mrs EM have a conflict of interest?

The Judge found that there was a clear conflict of interest in Mrs EM applying to the superannuation funds to have the death benefits paid to her personally while she was also acting as Administrator of the Estate.

What did the Judge decide?

The Judge found that the failure of Mrs EM to apply for the payment of the superannuation death benefits to the Estate was a beach of her duty to act in the best interests of the Estate. The Judge ordered that Mrs EM account to the Estate for the superannuation death benefits that had been paid to her personally.

I’m an Administrator of an Estate and I also want to claim the deceased’s super. What should I do?

If you are concerned that you may be in a position of a conflict of interest as an Administrator, I strongly recommend you consult an experienced Estate administration solicitor. Please contact me should you require further advice or assistance.