Death benefit disputes

7 min read
7 min read

Case 1:

The deceased member died of lung cancer at 50 years of age. She was survived by her spouse (who had cared for her throughout her illness), a son (aged 25 at the time of her death), and a daughter (aged 23 at the time of her death).

The trustee decided to pay the entire death benefit to the spouse, but this was objected to by the son. Originally, he wanted the entire death benefit to be divided between himself and his sister, but later he changed his submission, and argued for the benefit to be divided equally between the spouse, himself and his sister. The trustee disagreed and made a partial death benefit payment of $60,000 to the spouse so as to alleviate financial hardship. The balance of the death benefit had not yet been paid out from the fund.

The spouse’s evidence was that he was financially dependent on the deceased. They jointly owned a house that had been mortgaged and it was the deceased’s intention for him to use the death benefit to pay down the mortgage. He was the sole beneficiary of her estate, and it was well known that they had agreed he would leave his estate to their combined three children when he passed. The son did not have much faith in the spouse actually carrying out his mother’s wishes.

Neither of the adult children lived with their mother at the time of her death and, in the spouse’s view, neither were financially dependent on their mother. There was some contradictory evidence that the daughter was in receipt of money from her mother to buy and then run a car. Both children were in full-time education, had significant university debts but had also inherited $300,000 each from their grandmother a fact not known to their mother as she died before her own mother.

The Tribunal noted that there was no dispute the son and daughter satisfied the definition of dependant in both the Superannuation Industry (Supervision) Act 1993 (SIS Act) and in the trust deed. There was also no factual dispute that the spouse satisfied the relevant definition, given the deceased and he lived together on a genuine domestic basis in a relationship just prior to her death. Given these three people could legally be paid the death benefit, the Tribunal held that its approach was “to consider what might have occurred had the member not died, and whether there was anyone who had an expectation of ongoing financial support or a right to look to the deceased member for ongoing financial support”.

On this basis, the Tribunal agreed with the trustee’s decision to pay the entire death benefit to the spouse. It noted he had the sole responsibility of bearing the burden of paying the mortgage on the property he jointly owned with the deceased, together with other financial commitments previously paid, in part, by the deceased. Accordingly, only the spouse had an expectation of ongoing financial support had the deceased not died. Conversely, any financial support to the adult children was merely on an ad-hoc basis.

D17-1843

Case 2:

The facts in this case are similar to Case 1. Namely, a spouse and adult children from a former relationship in dispute about the decision of the trustee as to how to pay the death benefit. Interestingly, in this case, the trustee decided to divide the benefit equally between the dependants but the spouse thought all the monies should be paid to her, noting she and the deceased had no idea that superannuation death benefits don’t automatically form part of the estate where she was the sole beneficiary.

The deceased died in a traffic accident at age 54. Prior to his death, he lived with his wife and had two adult children who did not live with him. His daughter was 18 years old when he died having just had her 18th birthday. His son would soon have his 21st birthday. He had paid child support for his daughter and son until 18 years of age.

There was evidence that while his children did not live with their father, they visited regularly and, at those times, travel costs, accommodation, and food were all provided by their father and his wife. The Transport Accident Commission classified the son and daughter as dependants but this was disputed by the wife. Both children asserted they were partially dependant on their father but could not provide receipts to prove this was the case, given their father simply paid for things or handed them cash.

The Tribunal applied the same test as in case 1, reviewing the facts to determine what might have occurred had the father not died, and whether there was anyone who had an expectation of ongoing financial support or a right to look to the deceased for ongoing financial support had he not died. In this case, the Tribunal held that the wife and the deceased’s adult children were all financially dependent on him and the trustee’s decision to divide the benefit equally between them was fair and reasonable in the circumstances.

D17-1832

Case 3:

The trustee decided to pay the entire death benefit to the deceased’s mother on the grounds she was financially dependent on her son. The estranged father disagreed with this decision, and so he complained to the Tribunal.

The deceased member was a single 22-year-old lawyer at the date of his death in November 2011 and was in receipt of a reasonable salary. He lived at home in a caravan on his mother’s property for which he paid rent, although, just prior to his death, he had moved into the house. He also assisted his mother financially, paying cash for items like groceries. The member had not nominated any beneficiary to the trustee and had not completed a binding death benefit nomination. He was survived by several brothers and sisters and his parents were divorced. He had no children.

The father was of the view that the death benefit should have been distributed amongst the “whole family”. It was not in dispute that $255,000 had been paid to the mother from another superannuation fund and, for this reason, the father suggested $255,000 be paid from the fund to him with any remainder split between himself and his former wife.

A few weeks before his death, the member hand wrote a will on a page from an exercise book. He wished for his mother and one brother to be his executors and he left his entire estate to his mother. The father challenged the validity of this document but the Supreme Court of the relevant state held the document to be a valid will and granted probate to the mother. The mother was, therefore, the deceased’s legal personal representative (LPR) with the consequence that if the trustee decided to pay the benefit to her as LPR, it would be distributed to her under the terms of the will.

The trustee did not need to consider this option as it was satisfied that the deceased and his mother were in an interdependency relationship just prior to his death, which resulted in her being a dependant under both the trust deed and the SIS Act. They had a close personal relationship as evidenced by the will; he lived with his mother and supported her financially. He had left $2,000 cash in an envelope for his mother, and he had also provided his mother with domestic and personal support.

The Tribunal held that it was satisfied that the mother was partly dependent on the deceased at his date of death. This fact alone was sufficient to satisfy the definition of dependant in the trust deed and, accordingly, it was not necessary to make a finding on whether the mother was in an interdependency relationship with her son. The Tribunal affirmed the trustee’s decision.

D17-1825

Picture of By Clayton Utz

By Clayton Utz

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Derek Thompson

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Best Selling Author, Podcast Host of 'Plain English'

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In his paradigm-shifting #1 New York Times bestseller, Abundance (co-written with Ezra Klein), this award-winning journalist reveals how our policies and culture have pushed us into a world of scarcity (not enough housing, workers, or progress)—and offers a radical new path towards a world where housing is affordable, energy is plentiful, and innovation flourishes across industries.

He shares a compelling vision of a future where we have more than enough for everybody, and a practical, actionable roadmap for how to get there. It starts with taking more risks, building more expansively, and recognizing that we all have the power to create a world of abundance. “Everything’s utopian until it’s reality,” he says.

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

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Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.