AFCA Ignores Wills on Charity Gifts: Study Finds Only 11% Follow Testator Intent

The Australian Financial Complaints Authority (AFCA) is overriding wills on superannuation bequests to charity at an alarming rate. A new University of Sydney Law School study of 269 AFCA decisions found the authority honoured testators’ written wishes in just 11.2 per cent of 116 cases that discussed the will. Instead, AFCA prioritises family dependants, leaving charities empty-handed and will-makers unable to control their final gift.

How AFCA is blocking charitable bequests

A father of three died with nearly $100,000 in unspent superannuation. His will directed the money to charity, but two of his three daughters challenged the decision. AFCA awarded the entire sum to his middle daughter, ignoring his written wishes. Associate Professors Natalie Silver and Ben Chen analysed 269 AFCA decisions and found this pattern repeated: the authority distributed super according to the will in only 13 of 116 cases that discussed it. AFCA gives primacy to dependants’ interests, the researchers say, not testators’ intent.

Why superannuation is now Australians’ biggest asset

Superannuation has become the principal source of wealth for most working Australians, alongside the family home, Silver and Chen write in a forthcoming Melbourne University Law Review paper. Most Australians now die with the majority of wealth they held at retirement, including most of their super balance, according to a Treasury report cited by the authors. Yet the law on distributing a deceased’s superannuation remains unduly complex, making it nearly impossible for will-makers to ensure their money reaches their intended beneficiary, whether family or charity.

The legal gap blocking charity donations

Current superannuation law creates obstacles to leaving money to charity that do not exist for family gifts. Silver and Chen argue that changes would make it easier for the money to be left to charity. The case highlights difficulties faced by will-makers in ensuring their unspent superannuation goes to their intended beneficiary. AFCA’s practice of departing from written wishes underscores the need for reform, the researchers say.

What comes next for will-makers

The research reveals that it may be difficult for a will-maker to be sure who will get their unspent superannuation when they die. Australians planning estates now face a choice: accept that AFCA may override their wishes, or structure their super differently. The University of Sydney researchers have flagged the issue to policymakers, but no legislative change has been announced. For now, testators cannot rely on their written instructions alone.

Final Thoughts

With AFCA honouring testators’ wishes in just 11% of cases, Australians cannot assume their superannuation will reach charity as intended. Law reform is needed to align AFCA’s practice with written wills and give testators real control over their final gift.

FAQs

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.