As seen in Part 1 of our article on the case of Williams v Williams, this is the latest of a long line of cases that have found that a binding death benefit nomination (BDBN) was not binding. However, the case also is an important decision in relation to when the Court will remove an SMSF trustee.

Ultimately, the Court found it was appropriate to remove the deceased’s son as the trustee of the self managed superannuation fund (SMSF) on the basis that his behaviour was “concerning” and his position of conflict of interest. In particular the Court noted the son’s “decision to exercise his powers as a trustee against the [deceased’s second wife] and the deceased, because the [second wife] has not given a satisfactory explanation for the conduct of the deceased is, at first sight, not a decision that one might expect to be made by a trustee acting rationally. He does not say how or why he expects that the [second wife] could explain the conduct of her late husband.”

This case is a further reminder that trustees must act in a proper manner expected of their position or risk being removed (remember Re Marsella) or having a personal costs order against them (remember Wooster v Morris). While this can be difficult in the heat of a dispute, as the saying goes – dance like nobody is watching but write like it might be read out in a Court.

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Jan Harnischmacher
Lawyer
T +61 3 9611 0158
E jharnischmacher@sladen.com.au