In 2002, Francesca (the deceased) and her husband Augusto established a SMSF known as The Conti Superannuation Fund (the CSF), both of whom were trustees and members. The deceased had four children, Augusto was not the father of those children.
The deceased expressed in her Will in 2015 that she wished for her superannuation to be paid to her children and not to her husband Augusto. There was around $648,000 in the SMSF.
The Trust Deed of the SMSF that stated that without a BDBN, the death benefits must be paid at the trustee’s discretion. When Francesca died, she died without a BDBN in place. After her death Augusto appointed a sole trustee company of which he was the sole director and shareholder. The new Corporate Trustee resolved to distribute the entirety of the deceased’s funds to Augusto, not being inclined to follow the wishes expressed in the Will.
The executors of the estate brought an action against the trustee and Augusto arguing that they were entitled to be appointed as co-trustees of the fund. In that sense the children could frustrate the distribution of the super fund to Augusto.
The Court found that whilst the SIS Act allows for an exec
The children brought an action against Augusto which failed totally. Even though two of the children were Francesca’s estate’s executors they could not retrieve the benefits. First, they argued that the deed required the legal personal representative of Francesca to become the trustee of the SMSF as it stated within the trust that the SMSF must remain an SMSF, Augusto’s transference of the trustee from himself to his company changed the nature of the SMSF. However, this failed as the trustee is whoever the SMSF’s trust deed says it will be.
Secondly the children state that as a trustee, Augusto has the discretion to act in good faith, have genuine consideration and make decisions in accordance with the purposes that the discretion was conferred upon the trustee in the first place. As Francesca’s wills stated the benefits should be paid to the children, they believed Augusto had not acted in good faith. This failed as well. Therefore, this case should teach that a trustee of a SMSF has enormous power over the benefits once the principle trustee has passed away.
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