//
[2013] WASAT 178
General information, not legal advice.
State Administrative Tribunal (WA)
2013-11-04
Original judgment source is linked above.
Guardianship and administration Administration Gifting Transfer of assets Financial best interests
Application to transfer superannuation asset belonging to represented person refused
The limited administrator sought permission of the Tribunal to transfer her husband's superannuation entitlement out of his name and into her name on the basis that this would prevent diminution in the Centrelink entitlements available to him and to her, as his carer, after his 65th birthday. The Tribunal refused the request as not being in the represented person's best interests. The applicant was reappointed as limited administrator for the represented person on the same terms as previously, the Tribunal being satisfied that she had at all times fulfilled this role properly and had only made the application on the strength of her understanding of the recommendation of the Centrelink advisors. Further, she appeared to have been able to effectively and properly manage the balance of the represented person's affairs informally over many years.
1 The applicant is the limited administrator for the represented person, who is her husband, pursuant to the order of the Tribunal initially made 17 January 2007 and reviewed (with some variation) on 11 June 2007, and then again on 10 January 2012.
2 The order of that date is in the following terms:
On review under s.84 of the Guardianship and Administration Act 1990 of an order dated 11 June 2007 concerning the represented person, [PC], heard before Senior Sessional Member H Leslie on 10 January 2012, it is ordered that:
[GC] of [street address] is appointed limited administrator of the estate of the represented person with the following functions:
(a) To manage the represented person's interests in any superannuation funds including (but not limited to) those held with:
(b) To demand, receive and recover income of and monies due or that become due to the represented person;
(c) To invest any monies accessible by the administrator in any investments in which trustees by law may invest;
(d) To apply or expend monies accessible by the administrator for his maintenance, or that of his wife or any other person wholly or partially dependent on him, in such manner and to such extent as the administrator having regard to the circumstances and the value of the estate, considers proper and reasonable; and
(e) To execute documents or sign papers relating to the represented person's pension entitlements (or similar benefits), superannuation entitlements, taxation obligations, Medicare benefits or other health benefits.
3 The applicant seeks permission of the Tribunal to transfer her husband's current superannuation entitlement (funds) out of his name and into her name (into her superannuation account).
4 Although not specifically referred to in the application which is an application for review under s 86(1) of the Guardianship and Administration Act 1990 (WA) (GA Act) the application has been treated as incorporating a request made essentially under s 72(3) of the GA Act. for permission to gift.
5 The represented person is 64 years of age and will turn 65 on 15 January 2014. His wife is some years younger than he is.
6 The parties have been married for over 30 years. They have two adult children, both of whom still live at home. One, JC, is a dependant student. He attended the hearing with his parents. The applicant looks after the family, is studying and is carer for her husband who suffers from a mental illness that was diagnosed in 1995. Although this was not referred to in evidence, it appears from the documents provided that the applicant is also working part-time. The family also has rental income from a second property and interest income.
7 The represented person and the applicant both worked during their marriage and have both accumulated superannuation entitlements over time. The represented person's current entitlement (funds) stands at approximately $60,000.
8 After the represented person's diagnosis, the applicant took over the management of the family finances through the mechanism of a joint account. Over a three year period after this time, the represented person secretly accessed his superannuation, withdrawing a total of $54,000 over that time without the applicant's knowledge. His actions resulted in approximately one half of his then superannuation entitlement being dissipated.
9 Upon discovering this, the applicant applied to the Tribunal thereafter to be appointed as his limited administrator to manage and protect the balance of the superannuation. That order was granted to her in 2007 as referred to above.
10 The issue of incapacity was largely not contested in the proceedings. In the report prepared for the first hearing in 2007, the evidence of Dr M, psychiatrist, was that the represented person was unable to make reasonable judgments in relation to his financial affairs; that he suffers from bipolar affective disorder; that his condition is 'fluctuating', and that periodic exacerbations of his illness have led to him unwisely spending tens of thousands of dollars. Dr M supported a limited order given the problems that had arisen. The applicant's application at the time referred to a deterioration in the represented person's mental functioning over time which had led to him losing his career as a teacher and his inability to manage financial matters, to the represented person's lack of insight and to the need for the applicant to take over management of the family finances. At the various reviews, the position remained essentially unchanged. The represented person's general practitioner, Dr HT, confirmed the previous diagnosis. He indicated that he was 'not sure' about whether the represented person could make reasonable decisions in relation to his financial affairs; however, he described the impairment as 'static'.
11 At the hearing, the applicant expressed the view that the represented person was 'stable but pretty much the same'; that he could 'not really', 'not fully' make decisions about money; essentially that money to which he had access was 'just spent'. The represented person confirmed that his wife managed the money and paid the bills and that 'I need that, I suppose'. The represented person largely seemed content with the arrangement though, on a number of occasions, he expressed a desire for a small account so that he had some independence; for example, for spending money at the football, rather than having to ask for funds. In relation to more complex matters 'bigger picture' things he agreed that he needed assistance. The represented person's adult son, JC, indicated that he felt his father needed his mother's assistance in relation to the financial matters.
12 The represented person receives a Centrelink pension (disability support pension). Upon his 65th birthday in January 2014, he qualifies for the aged pension and his superannuation will become an assessable asset under Centrelink rules. The applicant makes the current request on the basis of advice received by her that the transference of the represented person's remaining superannuation entitlement into her name will have the effect of preventing a decrease in the pension amount to be received by the represented person going forward. It appears that this is because the transference will cause a reduction in 'assessable assets' held in his name once he turns 65 and, as a consequence, his fortnightly pension will not be reduced. The decrease that would otherwise apply is said by the applicant to be somewhere between $40 and $60 per fortnight. It appears that the applicant also receives a Centrelink benefit (carer's pension) and the transference referred to is also said by the applicant to have the effect of preventing a decrease in the amount of her pension by a similar amount per fortnight. It seems that the transferred funds will not be considered to be an 'assessable asset' in the applicant's hands until she turns 65 some years hence.
13 The net effect would, it is suggested, be an increase in the order of $80 $120 per fortnight in pension income into the household, on an ongoing basis, potentially for some years, were the transference to go through.
14 The applicant's argument is that the family's financial circumstances are very tight at present and that she wishes to do all that she can to maximise the income into the household for the benefit of all members of the family.
15 It is said by the applicant that, in discussions with Centrelink, she was referred to financial advisers who provided her with five different scenarios outlining options directed to this end.
16 The applicant advises that the family resources are:
17 It is noted that there is no mortgage or debt of any significance referred to. Limited, if any, information was available to the Tribunal about the expenses of the applicant, the represented person and their family. The context of the 'tight' budget seemed to be in relation to what might be regarded as usual living expenses.
18 The Centrelink document summarises the family income situation to be as follows:
19 The financial advisor is said to have provided information as to the potential pension incomes payable in a number of different situations. They were, essentially:
20 Option 3 is the applicant's preferred option and on this basis she makes this application.
21 It is noted that in the Centrelink documents, the difference in the pension that would be paid to the represented person in Option 1 as opposed to Option 3 appears to be approximately $26 per fortnight, not the $40 - $60 suggested by the applicant. Further, the Centrelink documents appear to show no alteration to the amount of the benefits that would be payable to the applicant in the two different scenarios, rather than a further $40 - $60 difference to the applicant's income. The applicant appeared to acknowledge this when it was put to her.
22 It appears that the financial adviser was recommended to the applicant by Centrelink. The applicant's understanding is that the course of action she proposes is not in breach of any Centrelink rules. She sees the financial advisor as having effectively recommended it. She was clear that, if there was any question of rule breach or fraud, she would not be seeking to take this action. It is to her credit that she has made the application to the Tribunal for permission before effecting the transfer or attempting to do so. Whilst I accept her personal bona fides in this regard, I remain concerned that the course of action that she proposes may in fact attract complaint for rule breach or possible fraud. It is to be noted that the financial adviser's material contains the following caveat:
Centrelink's advice information is strictly subject to the following: Social Security Legislation and regulations; Commonwealth Government policy. This information is intended to provide guidance in relation to possible financial strategies, options and solutions, and does not represent express financial advice or recommendation.
23 The applicant has not put into evidence any formal clearance or confirmation of her plan from Centrelink. She claims to have 'satisfied herself' (on behalf of the represented person) that there is no issue.
24 One would hope that parties can rely upon the advice of those to whom they are referred by Centrelink in relation to questions such as this. The applicant appears to have done no more than this. I am satisfied that she had no fraudulent intent but was simply pursuing a course that she thought was legally open to her. However, whilst the detail of Centrelink rules relating to this question were not in evidence before the Tribunal, it would surprise me greatly if Commonwealth government policy allowed one of a couple with the resources that this couple has, to divest himself of his superannuation entitlement in order to maximise his pension payment. I see no reason why superannuation should be dealt with any differently to other assets in that regard, and I am aware that there are very strict limits on, for example, the amount of cash that people can give away in any one year. The Tribunal regularly has before it instances of families trying to 'juggle' the way that an elderly relative's assets are held, inappropriately placing resources in the names of 'on side' family members or gifting inheritance payments early with the intention of preserving the full pension entitlement. Though one can see the motivation, such actions almost always constitute a fraud on the Commonwealth and need to be recognised as such.
25 It would clearly not be in the represented person's interest for action to be taken on his behalf which may constitute a breach of Centrelink rules or a fraud on the Commonwealth. There is insufficient information before the Tribunal for the proposed action to be so classed, even with the reservations I have expressed.
26 Regardless of whether or not the transference would be in breach of Centrelink rules or would constitute a fraud on the Commonwealth, the Tribunal is required to consider whether the transference the gift - should be authorised under the legislation as requested, either as some form of payment under s 72(3) or by means of some form of direction or authorisation within a recast limited administration order. That involves a consideration of whether, in all the circumstances, it could be said to be in the represented person's interests for the payment to be made.
27 This is an unusual case in that the applicant seeks what might be regarded as a capital payment of in excess of $50,000 by the represented person to herself in order to improve the income entitlement of the represented person and herself by, she says, something between $80 and $120 per fortnight. The basis for her calculated figures is not clear. In fact, it appears that the fortnightly benefit to the family would be considerably less than this perhaps a quarter of that amount - if the figures on the Centrelink documents are correct.
28 It is clear that in relation to the issues raised in this application, the applicant seeks to have the Tribunal consider the financial circumstances of the family as a single whole. She maintains that she is acting in what she perceives to be the best interests of the family unit. She appears to regard the proposed change in the legal ownership of the represented person's superannuation entitlement (that would follow as a matter of course from its investment in her name rather than his) almost as a matter of no significance; as if the asset was a 'family asset', best held in whatever way best suited the financial interests (and particularly the income maximisation) of the family. It is interesting to contrast this with her view in relation to the house that she inherited which she clearly regards as 'her house'.
29 The applicant and the represented person have been married for over 30 years. Despite the illness of the represented person, the applicant appears to have continued to support him throughout. Some tension and disagreement was apparent regarding the extent to which the applicant allows the represented person to have access to cash.
30 The applicant took great exception to hypothetical discussion about the position in which the represented person would be in the event that he and she separated in the future. At one level, that is understandable. However, it is incumbent on the applicant, as the proponent of the transfer of the super, to demonstrate how such a transfer is in his interests, bearing in mind all the exigencies of life.
31 The represented person acknowledged that he needed his wife's assistance in relation to financial management. He appeared to understand that what was being suggested was that he give his superannuation to his wife in order to increase the pension money that would be available after he turned 65 years. On the one hand he stated that:
It is my money. I have earned [it] I have toiled for nearly 30 years to earn that superannuation ... I don't want to give it away.
32 On the other hand, he appeared content to do this, but only on the basis that he could be assured that the superannuation resources would be available for the benefit of both himself and his wife. He again stated that he had 'worked hard for 27 years for that money'. He acknowledged things that he would like to do with the money with his wife. He seemed content with the proposal 'if she is willing to make it available'; 'so long as it is shared'; as long as 'it's used to our advantage'; that otherwise '... I'd be silly to let [go of] my super'; and, 'I don't want to lose it'. Whilst it appears that the family have been largely managing without significant disputes about money since the applicant took over management, there are clearly some tensions. It appears that the represented person remains quite unhappy about his access to spending money, even in small quantities, and about his unmet request for the setting up of a small account that he can independently manage himself, rather than having to constantly ask the applicant for money. The applicant has not permitted it. She says that there are issues about the represented person communicating his needs and that he does not manage his funds properly; that '... there is a continual small drawing of little things all the time without control ... it's like a very impulsive need all the time with everything ...'.
33 It was put to the represented person that it would require the cooperation of his wife for the superannuation money to be available to him because it would be legally hers. His response was essentially that:
... if she is willing to make it available to me, then I am fine with it ... I don't want to fight over it ... so that I can live with if I'm if I'm getting fair fair treatment ...
34 The mandate of the Tribunal is to look to the best interests of the represented person. The course of action proposed by the applicant, in my view, distils down to the following simple question: given the life circumstances and the financial circumstances of the represented person, can it be said to be in his best interests that an asset in his name worth in excess of $50,000 be transferred out of his name (albeit into the name of person who appears to be entirely properly motivated) in order that his pension not be reduced by approximately $25 per fortnight after he turns 65? In my view, it cannot be. Even if the income preservation figures were to be of the magnitude that the applicant claims (that is, $40 $60 per fortnight to the represented person, and another $40 - $60 to her), my view would be the same.
35 Accordingly, the application for authority to make the transfer payment of the husband's superannuation entitlement is refused. I do however reappoint the applicant as limited administrator for the represented person on the same terms as previously, since I am satisfied that she has at all times fulfilled this role properly and has only made this application on the strength of her understanding of the recommendation of the Centrelink advisors. Further, she appears to have been able to effectively and properly manage the balance of the represented person's affairs informally, as she has done for many years.
[GC] of [street address] is appointed limited administrator of the estate of the represented person with the following functions:
(a) To manage the represented person's interests in any superannuation funds including (but not limited to) those held with:
(b) To demand, receive and recover income of and monies due or that become due to the represented person;
(c) To invest any monies accessible by the administrator in any investments in which trustees by law may invest;
(d) To apply or expend monies accessible by the administrator for his maintenance, or that of his wife or any other person wholly or partially dependent on him, in such manner and to such extent as the administrator having regard to the circumstances and the value of the estate, considers proper and reasonable; and
(e) To execute documents or sign papers relating to the represented person's pension entitlements (or similar benefits), superannuation entitlements, taxation obligations, Medicare benefits or other health benefits.
I certify that this and the preceding [35] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________