Case 1:
The trustee originally decided to pay the death benefit to the spouse of the deceased member but this decision was the subject of a complaint made by the three adult children of the deceased and his legal personal representative (LPR). On review, the trustee changed its original decision and decided to pay the entire benefit to the LPR for distribution according to the will. It was this later decision that was the subject of the Tribunal case.
The adult children objected on the grounds the spouse was not in a ‘spousal relationship’ with their deceased father and that he had provided her with substantial loans which had not been repaid. Both of these allegations were disputed by the spouse and she argued that the trustee had made its decision on incorrect information concerning the repayment of the loans.
Shortly before his death, the deceased had made out a new will. He left small bequests to the LPR, his spouse and his former wife, larger bequests to his adult children and for the balance to be distributed equally amongst the spouse (described in the will as his partner) and his children.
When the trustee changed its earlier decision, the spouse supplied the trustee with documentary evidence to support her case. This evidence included bank statements, and cheque stubs to support the repayment of the loans, and statutory declarations from friends and family to support the existence of the spousal relationship. She also argued that she was in an interdependency relationship with the deceased. It appears the trustee did not accept the evidence around the loan repayment and it sought additional evidence that the large credit in the deceased’s bank account came from the spouse. That evidence was not forthcoming.
The trustee argued it had legal advice to support the revised decision and it had relied on that advice. The Tribunal summarised the advice as follows:
- the trustee had correctly formed the opinion the spouse was in a spousal relationship with the deceased;
- the bequest to the spouse in the will was made in the knowledge of his terminal illness;
- given the apportionment of the deceased member’s assets in his will and the spouse ‘being forgiven the balance of the loans’ (emphasis added), payment of the death benefit to her would result in her receiving a disproportionate percentage of his assets; and
- payment to the estate would provide a fairer and more equitable distribution of the deceased member’s entitlements.
Was the legal advice based on the correct facts?
The Tribunal held that the trustee did not appear to have offered the spouse the opportunity to counter the statements by the other parties to the effect the loans had not been repaid prior to reversing its decision. That lack of procedural fairness made the trustee’s decision to pay the benefit to the LPR unfair and unreasonable. On this basis, the Tribunal decided to substitute its own decision for that of the trustee.
Importantly, the Tribunal gave weight to the fact the will had been signed just prior to death in circumstances where the deceased knew he would die shortly. He also knew whether or not the loans had been repaid and no matter what the true facts were, the deceased decided to split his estate equally amongst his three children and his spouse, after payment of specified bequests.
In these circumstances, the Tribunal decided it would be fair and reasonable to distribute the benefit equally between the four identified dependants, namely the three adult children and the spouse. That decision would, of course, most likely have a different monetary outcome for each of the dependants than if the benefit was paid to the LPR for distribution in accordance with the will.
D17-18211
Case 2:
At 37 years the member died unexpectedly leaving his mother, father and younger brother with whom he lived. The family were refugees and the parents had multiple health issues. The trustee decided to pay the member’s parents on the grounds he had died intestate and had no dependants. It was the decision that the parents were not his ‘dependants’ that was the subject of review at the Tribunal. The case essentially is about whether the parents were financially dependent and/or in an interdependency relationship with their son immediately prior to his death. The brother (who was the parents’ full time carer) elected to not be a party to the complaint.
The trust deed for the fund complied with the interdependency relationship laws contained in the Superannuation Industry (Supervision) Act 1993 and the trustee, of course, had an obligation to comply with its trust deed.
The parents did not speak, read or write English. Consequently, much of the evidence had been submitted to the trustee by the brother. Statutory declarations indicated that the parents depended on the deceased in “practically all aspects of [their]… lives, financially, physically, emotionally, personal, mental and psychologically”.
Approximately seven years prior to his death, the father’s post-traumatic stress disorder became so severe the family decided the elder brother would continue working to support the entire family and the younger brother would become the full-time carer of the father. The parents and the younger brother received government pensions but evidence indicated that household expenses far exceed these pensions with the balance being paid for by the deceased. The deceased also attended his parents medical appointments, took them to the pharmacy to buy medicines (with the pharmacist confirming the intimate relationship between the deceased and his parents). He also attended to many of the household chores. Evidence from wider family members indicated the deceased had a ‘financial and domestic dependency relationship’ with both his mother and father. It was also pointed out that it was necessary to understand the cultural traditions of this particular family.
Two other funds had accepted that the parents were financially dependent on the deceased and approved payment of the benefit to them on this basis.
The trustee decided the parents were not in an interdependency relationship with their son on the grounds the duration of the living arrangements was unclear, and there was insufficient evidence of financial support from the deceased. The trustee was of the view the care provided was not significantly above that which is expected from a normal parent child relationship. For this reason, the trustee had elected to pay the parents in equal shares as ‘non-dependants’ having first satisfied itself there was no legal personal representative.
The Tribunal noted that the deceased had nominated his parents and his brother as beneficiaries on his fund application form and this nomination had not changed before his death. He had no will so it was reasonable to assume he intended his parents to receive the benefit when he had no spouse, children and had died intestate.
The Tribunal satisfied itself on the evidence that all five criteria of an interdependency relationship under the trust deed had been met. It also held that each relationship had to be based on its particular facts on not on general observations. Here the family had provided a long family history dating back to fleeing another country as refugees with the deceased as an infant. That history demonstrated the depth of the relationship the deceased had over his lifetime with his parents, and the strong cultural traditions which bound the family. These facts largely explained why the deceased still lived with his parents at the age of 37. In effect, he had sacrificed his own social and personal life to look after his mother and father.
The Tribunal held there was enough evidence to support the family lived together and that the deceased played a role in supporting his wider family financially. Accordingly, the Tribunal was satisfied that both parents were “partially dependent
financially’ on the deceased and they met the definition of ‘dependant’ in the trust deed. The Tribunal also held that, overall, the evidence supported that the relationship did go beyond that of a normal parent/adult child relationship with the consequence that there was also an interdependency relationship. This meant the parents were undoubtedly dependants of the deceased and the Tribunal’s decision was substituted for that of the trustee.
D17-18 6
