James McIntosh died without leaving a will. His mother,
Elizabeth McIntosh, was granted administration of his estate.
Elizabeth and James' father, John McIntosh, were divorced and
their relationship was acrimonious.
James' ordinary estate was relatively modest. However, the
death benefits under his superannuation accounts totalled about
James and his mother had lived together and were in an inter
dependant relationship. This meant that any superannuation proceeds
that she received would be free of tax. As the father was not in
such a relationship, any moneys that he would receive would be
Elizabeth made an application to the superannuation trustees who
agreed to pay all the superannuation proceeds directly to her and
not to the estate.
The Supreme Court of Queensland found that in so doing,
Elizabeth was in breach of the duty which she owed to the estate
arising from her position as administrator. By making an
application to the superannuation trustees that the money be paid
to her personally she had placed herself in a position where her
duty as administrator of the estate was in conflict with her
personal interest. She was effectively required to pay the
superannuation proceeds she received into the estate. As a result
the deceased's father was entitled to receive an equal share of
the superannuation proceeds.
The Court recognised that if the deceased had made a binding
death benefit nomination with his superannuation trustee, the
trustee would have no alternative other than to pay the proceeds to
the nominated person.
In the course of his decision the Judge made an interesting
observation that if Elizabeth had been named as executor in
James' will, she would have been entitled to make submissions
to the superannuation trustee that the proceeds be paid to her
personally. He stated that this situation was a general exception
to the rule of conflict of interest because the testator would have
known that by nominating his mother as executor she would have this
potential conflict of interest.
It would appear that Elizabeth's big mistake was applying
for administration of the estate. If John McIntosh had applied, or
if she had referred administration to a trustee company, then she
would have been allowed to make submissions to the superannuation
trustee that the moneys be paid to her because of her inter
dependant relationship. If the superannuation trustee had accepted
her submission then she would have no obligation to account to the
estate or to John McIntosh.
McIntosh v McIntosh  QSC 99
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If you are doing a Will, or you are the executor of a deceased estate, consider what taxes and duties could be payable.
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