Legal Update - Combustible Cladding Checklist and its impact on Selling - March 2019

Friday, March 01, 2019

Combustible Cladding Checklist and its impact on Selling  Read More >

Legal Update - Succession Law - December 2018

Thursday, December 13, 2018

Succession Law - Burgess Decision



The role of a trustee can be surprisingly complicated, especially where conflict arises between the personal interests of a trustee, and the interests of the beneficiaries which the trustee is expected to favour above all others.

For the majority of people, the most likely exposure to trusteeship in their lifetimes is as the executor (or ‘administrator’) of a deceased estate. This is also the most common instance for a conflict of interest to arise, as administrators are usually close relatives of the deceased and tend to be among the primary beneficiaries.

The critical aspect of trusteeship is a trustee’s ‘fiduciary duties’, which can generally be understood as a strict obligation to act in the best interests of the beneficiaries of the trust, through loyalty, care and skill, and the avoidance of conflicting interests. Trustees take on an immense responsibility as custodian of the interests of beneficiaries. In recognition of this, the Courts rigidly enforce the duties of trustees, even where the outcome may seem unfair.

The Supreme Court of Western Australia recently had the opportunity to remind us of the strict nature of the no-conflict rule in Burgess v Burgess.1
Mr Burgess died intestate (without a Will), and his widow was appointed administrator of his estate. The deceased left four retail superannuation fund accounts. Mrs Burgess sought to have the super fund death benefits paid directly to her: a reasonable proposition as a dependant spouse. However, once Mrs Burgess was appointed administrator, she took on the role of trustee, and her request to have death benefits paid to her personally put her in a position of conflict, where the trustee was required to seek that the proceeds be paid to the estate.

1 [2018] WASC 279.

In the end, Mrs Burgess was permitted to retain the death benefits which were paid by one of the funds to her personally before she was appointed administrator, but had to pay the benefits received after taking on the trusteeship back to the estate, and apply for benefits of the remaining fund to be directed to the estate. As administrator, Mrs Burgess would then be required to distribute the monies in the estate to the beneficiaries entitled to them according to the rules of intestacy.

For the Burgess family, matters would have been greatly simplified – and the assets of the estate saved from dissipation in Court proceedings – if Mr Burgess had an appropriate estate plan in place, including a Will and Binding Death Benefit Nominations.

Given the strict statutory regulation of superannuation funds, it is even more important to seek guidance to ensure your intentions for the proceeds of your superannuation fund and associated death benefits are given effect on your death. It is possible to deal with superannuation funds within the terms of your Will, if a proper nomination is made by Binding Death Benefit Nomination. Even those who do not think that they have significant assets to warrant an estate plan will have insurance policies attached to their superannuation funds which can be substantial.

The Burgess matter also highlights the gravity of the role of estate administrator. There was no suggestion that Mrs Burgess acted with ill intent. In fact, she appeared to have believed that she was doing the best she could for her young children. Unfortunately, her fiduciary duties were paramount, and she had breached them.

For a person facing the responsibility of trusteeship, seeking legal advice to confirm and guide their actions in estate administration can be very reassuring, not to mention preventing unpleasant surprises down the track.

If you have any questions about the Burgess decision or would like to discuss estate planning matters, feel free to contact Paul McHugh by email at paulm@tml.com.au, or call 07 5443 1566.

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Issues for Foreign Buyers of Residential Real Estate - September 2018

Monday, September 17, 2018

Issues for Foreign Buyers of Residential Real Estate  Read More >

Avoiding Challenges to your Will - July 2018

Wednesday, July 04, 2018

Paul McHugh (2009) TEST  Read More >

Legal Update - Additional Foreign Acquirer Duty to increase in QLD

Wednesday, June 20, 2018

Additional Foreign Acquirer Duty to increase in QLD  Read More >

Legal Update - Off the Plan Changes

Monday, April 16, 2018

New laws affecting the sale of new residential premises and new residential subdivisions in Australia  Read More >

Additional Foreign Acquirer Duty (AFAD)

Tuesday, February 13, 2018

Additional Foreign Acquirer Duty (AFAD)   Read More >

Changes to Commercial Building Disclosure

Monday, June 26, 2017

Recent changes to the Australian Government’s national Commercial Building Disclosure (CBD) program will soon require more vendors and lessors of commercial office spaces to make pre-market disclosure of energy efficiency ratings to prospective purchasers and lessees.  Read More >

A Summary of the 2017 Budget Outcomes for Foreign Property Investors

Tuesday, June 20, 2017

The 2017 Federal Budget handed down on 9 May 2017 expressly targeted foreign investment in Australian assets, particularly residential real property, which has been framed as a response to concerns regarding national housing affordability.  Read More >

Discretionary Trusts Remain a Valuable Asset Protection Tool

Thursday, March 23, 2017

A decision recently handed down by the Queensland Supreme Court has provided overdue clarity and relief for users of discretionary trusts for asset protection, and of course for the legal fraternity at large.   Read More >