The recent Court of Appeal case of Wareham v Marsella (2020) VSCA 92 was a timely reminder of the “good faith” obligations. These are the relevant facts.

• Helen Swanson set up a self-managed super fund for herself in 2003.
• The trustees of the fund were Helen Swanson and her daughter, Carol Wareham, a child from Helen’s first marriage.
• Helen Swanson, at the time of her death, had been married to her second husband for 32 years and he was the executor of her estate.
• Following Mrs Swanson’s death, her daughter, Carol, was the only trustee and she appointed her husband as a co-trustee. Carol and her husband exercised their discretion as trustees and paid the whole of the superannuation fund to Carol.
• Mrs Swanson’s husband applied for orders setting aside the payment to Carol and for the removal of the trustees. He was successful in both counts.

The good faith duty is rarely considered by a SMSF trustee when making decisions because the interest of the members and their families are usually closely aligned. However, when this changes because of warring business partners, unhappy families or divorcing couples it is imperative that the best interest duty is properly understood and applied.  In such circumstances, the whole problem can be overcome by the member signing a binding death benefit nomination form which cannot be amended or challenged by the trustees of the SMSF.

We recommend reviewing your superannuation death benefit nominations when you are instructing us to prepare your Wills and, on other occasions, where there has been a change in the circumstances regarding business or family relationships.

Call Paul Pritchard on 9543 1444 to make an appointment.