Case study

Complaints by adult children relating to death benefits

There is one group of people that the Tribunal has noticed are regularly disappointed in the outcome of their claims to the Tribunal: adult children who have an interest in a death benefit.

Take the following hypothetical example:

Sonya is 27 and is married with two young children. When she was 8, her father left her mother and Sonya rarely saw him for another 10 years. He did not pay any maintenance for her. When she was 18, they patched things up and he would visit her from his home interstate at least once a year and they maintained regular telephone contact until his sudden death in a car accident.

At the time of death, Sonya's father was living with his de facto spouse and they had a 5-year-old son.

Although Sonya is not on the bread line, she and her husband could make use of some of the $200,000 death benefit payable from her father's superannuation fund. She also is angry about the unfairness of how her mother used to struggle to keep her when she was young, without any support from her dad.

However, the trustee has decided to pay it all to the de facto spouse.

Sonya decides to complain about this decision to the Superannuation Complaints Tribunal, arguing that it is a matter of principle. After numerous letters from the de facto spouse, herself and various family and friends, the Tribunal decides to uphold the decision of the trustee. This makes Sonya feel doubly cheated.

If Sonya had more clearly understood the role of superannuation, she could have saved herself a considerable amount of work (in preparing and presenting her case to the Tribunal) and heartache.

No one disputes that it is unfair when a parent has not paid maintenance for his or her child. However, it is not the role of superannuation to compensate for past injustices. On death, superannuation is primarily paid to those who would or should have received ongoing financial support from the deceased, had (s)he not died. Broadly, it is designed to compensate for future loss, not for past loss.

This does not mean that adult children (those over 18 years of age) will never succeed in a case at the Tribunal. If, for instance, an adult child is financially dependent on their parent at the time of death, the Tribunal might consider that a trustee's decision to deny them any portion of a death benefit was not fair and reasonable in its operation in relation to the adult child in the circumstances. (Financial dependence generally involves more than having received birthday and Christmas gifts.)

However, an adult child who is earning and living independently will be less likely to receive any substantial superannuation payment if there is a spouse (including a de facto spouse) and/or children or young adults who remain financially dependent.