Superannuation savings now comprise a major asset of many
people, be they retirees or younger people saving for
retirement, particularly if they hold life insurance in their
When preparing an estate plan it is critical that people
consider how their superannuation benefits will be dealt with
if they die.
The importance of this is highlighted by the New South Wales
case of Katz v Grossman  NSWSC 934.
In this case, Daniel Katz brought an action against his
sister Linda Grossman and her husband Peter Grossman claiming
an interest in their father's self managed
The facts of this case were as follows:
1. Ervin and Evelin Katz were individual trustees of their
self managed superannuation fund.
2. Evelin died in 1998 and Ervin appointed Linda as an
additional trustee of the fund.
3. When Ervin died in 2003, Linda appointed her husband
Peter as a trustee.
4. Ervin had made a non-binding nomination of beneficiary in
which he indicated that he wanted his superannuation benefit to
be divided equally between Daniel and Linda.
5. Linda and Peter refused to follow Ervin's
non-binding nomination and decided to pay the entire benefit of
approximately $1,000,000 to Linda.
6. Daniel challenged the appointment of Linda and Peter as
trustees of the fund.
7. The Court held that both Linda and Peter were validly
appointed as trustees.
It appears that the end result was that Linda paid the
entire death benefit to herself to the exclusion of Daniel.
While there may have been another avenue for Daniel to
challenge the decision under the Trusts Act, this is an
expensive option and avoidable if Mr Katz's
superannuation was considered as part of his estate
This case highlights the importance of ensuring:
your estate plan transfers control of your superannuation
fund (and the power to pay death benefits) to the right
your Will allows the executors to reduce the share a
beneficiary will get under the estate if they have received a
direct payment of superannuation benefits; and
changes of trustee are properly documented and
It is also crucial to consider the appropriateness of
binding nominations in certain circumstances. In this case, if
Mr Katz had made a binding nomination, his wishes would have
been carried out, regardless of who took control of the
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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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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