Why SMSF estate disputes are rising & how you can avoid them 

Australia is experiencing a sharp increase in Will and estate disputes. In some states, the number of contested probate matters has risen by more than 60% over the past decade.

Against this backdrop, Self-Managed Super Funds (SMSFs) are becoming fertile ground for family conflict and litigation. 

SMSFs are unique – they sit outside the estate in many respects, are governed by their own rules, and often hold significant property assets. In Victoria, where both urban and regional property values have grown strongly, SMSFs are particularly vulnerable to misunderstandings, disputes, and costly court battles. 

Why are disputes increasing? 

Several trends are fuelling the rise in SMSF estate and probate disputes, particularly in Victoria: 

• Rising asset values: Melbourne’s property recovery and steady increases in regional farmland values have pushed SMSF balances higher, making disputes more tempting for potential challengers. 
• Blended families & complex beneficiaries: Second marriages, stepchildren, and complicated family structures mean more parties with competing expectations. 
• SMSF deeds trump Wills: Many families don’t realise that an SMSF deed and its Binding Death Benefit Nominations (BDBNs) override the terms of a will. If these documents are not consistent, outcomes can be very different from what was intended. 

Common SMSF dispute triggers 

The following issues frequently lead to SMSF disputes: 

• Lapsing or invalid BDBNs: If nominations expire or are invalid, trustees may have discretion over payments—an easy recipe for conflict. 
• Trustee conflicts: Tension often arises between family members acting as individual trustees, or between individual and corporate trustees, over control and allocation. 
• Blended family tensions: Children from earlier relationships may challenge allocations, especially when SMSF-owned property is involved. 
• Poor documentation: Where records are inconsistent or unclear, courts may be left to interpret intentions—fuel for costly disputes. 

Case study: Munro v Munro [2015] 

One of the leading examples of how SMSF paperwork can override family intentions is the Queensland case of Munro v Munro [2015] QSC 61. 

Mr Munro believed he had completed a valid binding death benefit nomination (BDBN) by directing his superannuation to the “trustee of deceased estate.” However, under superannuation law, only certain individuals—such as a spouse, child, or financial dependant—can be nominated. Because his nomination referred to an entity (the estate) rather than a person, the Court found it invalid. 

As a result, control of the SMSF death benefits fell entirely to the trustee of the fund—Mr Munro’s second wife. She was not bound to follow his will or stated wishes, and the benefits did not necessarily flow as he had intended. The dispute that followed was both costly and stressful for the family. 

Why does this case matter?

• Munro v Munro is a textbook example of how even a small technical error can derail carefully laid estate plans: 
• Trustees may then have discretion to distribute benefits, which can lead to family conflict and litigation. 
• A BDBN that doesn’t comply with the law or SMSF deed requirements can be struck out as invalid. 
• SMSF rules and nominations take precedence over a Will (your estate plan cannot “fix” an invalid BDBN). 

How you can reduce the risk of disputes 

There are practical ways to help minimise the risk of SMSF conflict: 

• Regular review: Revisit SMSF deeds and BDBNs regularly. Laws, rules, and family circumstances change—reviews help keep documents current. 
• Document alignment: Ensure Wills, family trusts, and SMSF documents all work together to reflect your intentions clearly. 
• Corporate trustees: Using a corporate trustee structure can improve succession planning and provide stronger continuity. 
• Clear communication: Share your plans with family members. Surprises often spark disputes. 

In estate planning, prevention is always better than cure. Court disputes are expensive, stressful, and time-consuming, while up-front planning is far more cost-effective and supportive for loved ones. 

If you want to reduce the risk of family conflict in your estate planning, contact Aintree Group Legal. Our team can help review your documents and provide guidance tailored to your individual circumstances. 

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant and lawyer.