31/07/2017

Walt Disney did stepmothers no favours when he created “Maleficent”, the wicked stepmother in “Snow White”.  Thanks to her it is now a given that stepmothers are out to do the husband’s children considerable harm and need to be guarded against. But this is not necessarily true at all.  Many step-parents care deeply for their step-children. Luckily for de facto spouses, Disney didn’t make an animated movie about them.

So what is the legal relationship between step-parents and step-children and how could that affect the family’s estate planning?  And how do de facto spouses fare in estate planning?

Blended families call for greater consideration when estate planning is done to ensure that the relevant individuals are adequately and properly provided for.  In particular, the way de facto spouses and step children are treated under the law should be taken into account when drafting wills and binding death benefit nominations.

Queensland has changed the way step children (and de facto spouses) are treated under the Succession Act 1981 (QLD).

Superannuation death benefits of an individual can only be paid to eligible dependents.  These include a member’s spouse or de facto spouse and child.  The ATO’s Interpretative Decision 2011/77 held that a “step child” is not considered a “child’ of a deceased member and is not eligible to receive superannuation death benefits.

However, if a step child is financially dependent or in an interdependent relationship with the member at the time of the member’s death, the step child would be an eligible beneficiary of superannuation death benefits.

An understanding of the limited classes of superannuation death benefits payable to various persons (and the potential inability to distribute benefits to a step child) is critical to estate planning documents such as an individual’s ability to distribute other assets outside of superannuation to those ineligible to receive super death benefits.

Generally, the separation of the parents (whether by death or design) brings the step-relationship to an end because it is based on the primary relationship of the parents.

The QLD legislation however has made changes to the meaning of a step child and states that the relationship between a step child and step parent ceases when the de facto relationship between the step parent and the deceased natural parent ends.  However, the step child and step parent relationship is not affected by the death of the natural parent if at the time of the death the de facto relationship was still in existence.

The section in relation to a step child is important when considering potential family provisions claims by a step child who may be eligible to contest a deceased’s will.

De facto marriage relationships have traditionally been treated differently to formally-married relationships.  For example, where married couples get divorced, a testator’s will is revoked.  But when a de facto relationship ends the individual’s will continues until changed or revoked by the testator. 

Recently, there has been a shift in this view.  Queensland’s amended Succession Act legislation provides that any gift to a de facto spouse is immediately revoked when the de facto relationship ends.

In comparison, other states such as NSW do not revoke a testator’s will when a de facto relationship ends.

Changing societal views on de facto spouses and step-children have changed the way these groups are treated under Succession Act legislation.  A testator’s (based in Queensland) estate planning documents should be revised in light of the Queensland legislation changes to ensure that you understand how it affects any current arrangements in place.

If you require any assistance with the drafting of new estate planning documents or revising current estate planning arrangement, please contact Townsends Business & Corporate Lawyers on 02 8296 6222.