How mundane items such as the definition of a relationship can have profound consequences for estate planning matters.

If your mother were to marry a new partner, who was not your father, then how would you describe your relationship to that person?  Some common answers might include:

  • “My stepfather”;
  • “My mother’s partner” / “my mother’s spouse”; or
  • “the beast” (or some other unpleasant term, if you weren’t on good terms)…

There’s no correct or incorrect answer, but when it comes to estate planning and superannuation matters, the legal definitions of certain relationships can be of fundamental and critical importance.

Rouse Lawyers was fortunate enough to successfully represent a client in relation to upholding the validity of a superannuation nomination.  The critical issue in this matter was the relationship between our client, and her late stepfather.

The Law

Superannuation laws specifies that superannuation death benefits can only be paid to certain eligible persons, being any one or more of the deceased person’s:

  • Surviving spouse;
  • Surviving child or children (which includes a stepchild);
  • Interdependent persons; or
  • Estate.

These nominations can either be binding (i.e. the superannuation fund must follow the directions), or non-binding (i.e. the superannuation fund may decide to vary the directions, if suitable grounds can be established by an eligible claimant). 

The Matter

In our matter, the deceased member (let’s call him Joe) made a binding superannuation death benefit nomination in favour of his stepdaughter (let’s call her Kate).  Joe was married to Kate’s mother, and so Joe considered Kate his stepdaughter.  Under the terms of superannuation law, this type of nomination would be perfectly valid, as a stepchild is included within the terms of the definition of a “child”.

After Joe passed away, Kate asked the superannuation fund to pay Joe’s superannuation death benefits in accordance with his binding death benefit nomination.  Unfortunately in their case however, the superannuation fund asserted that Joe and Kate were no longer stepfather/stepdaughter.

A few years prior to Joe’s death, his wife (and Kate’s mother) had passed away.  Joe and his wife remained married until her passing, yet the superannuation fund asserted that because Kate’s mother had passed away prior to Joe, then that death severed the stepfather/stepdaughter relationship.

The Results

Understandably, Kate was upset at being informed that Joe’s superannuation fund would not be upholding Joe’s directions, as specified in his binding death benefit nomination.  She engaged Rouse Lawyers, who were able to promptly ascertain and establish that the superannuation fund was relying on outdated caselaw precedents, and so demonstrate the flawed reasoning of their position.  Following only a single substantive communication with the superannuation fund, Rouse Lawyers had the superannuation fund review and reverse its initial determination, instead upholding the validity of Joe’s binding death benefit superannuation nomination, resulting in the full payment of those benefits to Kate as Joe had directed.

What’s Next?

The above circumstances may seem very specific, but with ever-increasing numbers of blended families in Australia, seemingly simple matters such as the relationship of a stepparent and stepchild can become a loaded legal issue, if not addressed with care.

Rouse Lawyers is able to assist with all your estate planning, superannuation and asset protection strategies.  If you have any questions regarding your estate planning and transfer of assets to beneficiaries, get in touch with Rouse Lawyers today. 

Disclaimer

The information contained on this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.

Accordingly, the information on this site is provided with the understanding that the authors and publishers are not providing legal advice. As such, it should not be used as a substitute for consultation with professional legal advisers. Before making any decision or taking any action, you should consult with a professional lawyer from Rouse Lawyers.

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