Same Sex: Same Money

Posted on 04. May, 2010 by in Same Sex Financial Advice

Same Sex Same Money Financial Advice

Adam is a 50 year old gay man whose partner of 20 years (Steve) just passed away. Adam and Steve had always intended their assets to go to each other when they passed. This should have allowed the surviving partner to live a comfortable life – albeit alone.

However Steve, forever the procrastinator, didn’t get around to putting Adam as his nominated beneficiary on his Superannuation fund. Steve never took much interest in his super – not really aware of where the funds were or how they were invested. He believed as he couldn’t spend the money now anyway, why bother.

What Steve wasn’t aware of, was as a result of him not nominating a beneficiary. The superannuation fund trustee (someone who doesn’t even know them) will now decide how his superannuation will be distributed.

As opposed to being able to celebrate Steve’s life and morn his passing, Adam has the added burden of proving to Steve’s superannuation fund that he did in fact have a relationship with Steve. Adam even has to provide proof that they lived together, and provided each other with financial support and domestic support.

This is being made harder when Steve’s family (who never approved of their relationship) disputes Adam’s claims, and are staking claim to his funds also.

This may be an easy process or a long drawn out one – with a range of outcomes. From Adam receiving all, some or none of Steve’s super proceeds, to Adam having to pay tax at 16.5% ($33,000 on Steve’s $200,000 balance), if the trustee pays him the proceeds, but doesn’t determine him to be a dependent.

Legislation Changes

The Government recently amended Commonwealth Laws to eliminate discrimination against same-sex couples and their children with reference to superannuation. One particular change was in the definition of a ‘spouse’, which was expanded to include same-sex partners.

As Steve and Adam lived together as partners, had Steve informed his superannuation fund via a binding nomination that Adam was his ‘spouse’ and sole beneficiary, the stress and heartache Adam is currently going through could have been avoided. The proceeds would also have likely gone to Adam tax free.

Nominating a preferred beneficiary

It is important that you inform your superannuation funds of your preferred beneficiary. If you don’t have this set up correctly, you may find on your passing your loved one may have to pay tax on your superannuation, or worse – receive nothing (depending on your circumstances).

You can normally nominate one or more preferred beneficiaries (or your estate) when joining your super fund. You can change these nominees at any time by writing to your fund. However, this is not necessarily binding on fund trustees.

Some funds offer binding nominations in order for your nomination to be binding on the trustee of your super fund. Meaning your partner or children are more likely to receive your funds, as opposed to a long lost family member staking claim to your assets. This must be reviewed every 3 years to ensure it remains valid.

Nominating your partner as your ‘spouse’ via a binding beneficiary makes it more likely they will receive death benefits tax free rather than relying on the ‘interdependency’ definitions, or not nominating anything – and letting someone you have never met, make decisions on your behalf.

To ensure your loved one is appropriately looked after, you should seek help from a Certified Financial Planner knowledgeable in the area of superannuation, GLBTI and same sex legislation changes. Why make it harder on your loved one on your passing than you need to.

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