Elder law & succession: April 2024

Challenging SMSF death benefit nomination for lack of mental capacity and volition

On 26 July 2020, Dr Harry Nespolon signed a ‘Binding Death Benefit Notice’ (‘BDBN’) in relation to the Nespolon Superannuation Fund (‘the Fund‘) that directed the fund trustee to pay his member benefits to his de facto partner, Lindy van Camp, in the event of his death. At the time, he was in hospital and died from cancer about seven hours later. He was the sole member of the fund and sole director of the fund’s trustee, Bellahealth Pty Ltd.

Following his death, the executors of Nespolon’s will were appointed directors of Bellahealth. The trustee did not pay Nespolon’s member benefits, estimated as $4,722,000, to van Camp but contested the validity of the BDBN. Van Camp brought proceedings for a declaration that the BDBN was valid and binding, and an order that the benefits be paid to her forthwith. Bellahealth contended that Nespolon lacked mental capacity to enter into the transaction at the time he signed the BDBN and alleged unconscionable conduct by van Camp in procuring the BDBN. They sought an order that the BDBN be set aside or a declaration that it was void or unenforceable.

The evidence indicated Nespolon wrote and signed his name in his capacity as member of the fund, inserted the date on the first page of the BDBN, and printed and signed his name on the Trustee Acknowledgement on the second page, in his capacity as the sole director of Bellahealth. He did so in the presence of two doctors who subscribed their names and signatures as witnesses. Prior to and during his hospital admission, Nespolon was prescribed and administered opioid medications for pain.