If you’re in a long-term same-sex relationship, you need to be aware of your financial rights and obligations. These responsibilities include knowing how to handle superannuation not only during your partnership, but also in the event that you separate and if one of you passes away.
First, it’s important to understand how superannuation laws define your relationship. The Australian Taxation Office (ATO) definition of the term spouse is, “another person (whether of the same sex or opposite sex) who, although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple”.
What are your rights if your partner passes away?
If your same-sex partner passes away, and their superannuation fund provides insurance cover for death (as most funds do), you may be able to claim that death benefit. The outcome depends on many factors including whether you were in an “interdependent” relationship with the deceased. There are currently 2 tests to establish an interdependency with the deceased: the basic test and the disability test.
The basic tests sets out that people are considered to be in an interdependency relationship if they:
- have a close personal relationship;
- live together;
- one or each of them provides the other with financial support; and
- one or each of them provides the other with domestic and personal support.
If you do not satisfy the basic test, you can still be considered to be in an interdependent relationship with the deceased if you qualify under the disability test. The disability test sets out that people are considered to be in an interdependency relationship if they:
- have a close personal relationship; and
- they do not satisfy one or more of the other three elements of the basic test (above) because either or both of them suffer from a physical, intellectual or psychiatric disability.
This means that in certain circumstances, you can meet the interdependency test even if you are not living with that person or sharing finances with them. The fund’s trustee commonly considers this situation in the case of a disability or illness, such as when one of you is living in a nursing home or in hospital and that is the reason for not living together or sharing finances at the date of death.
Nominating your partner for any benefits
The safest way to ensure that your partner will receive the superannuation benefit payouts from your fund is to nominate them as a beneficiary. To do so, you need to complete a binding nomination form, which many funds offer, nominating your chosen recipient of the death benefit and superannuation money. (It is not enough to allocate your superannuation money including any insurance, to your desired recipient in your Will.)
You must renew a binding nomination form every three years, and it’s important to keep yours up to date for a couple of reasons: firstly, so that your partner is financially secure in the event of unforeseen circumstances, and secondly, so that you can change the details of your beneficiary if you and your partner separate, otherwise, your ex-partner could still receive those benefits upon your death.
The key factors that ultimately determine who receives your superannuation death benefit include your relationship with the deceased and how dependent you were upon one another. The trustees of the super fund make these decisions.
What happens if you and your partner separate?
If you’ve separated from your partner, you may be able to claim superannuation benefits upon your ex-partner’s death. This will depend on whether you’re still in a close personal relationship at the time of death, whether you still rely on one another financially (for example for assistance with school fees or living expenses), whether a new partner is involved and on whether the deceased had any other dependents. Again, the decisions are up to the fund’s trustees.
Self-managed super funds
Each self-managed super fund is set up differently, so the rules that determine the recipient of any death benefits will vary according to your particular circumstances. For example, some self-managed funds don’t provide superannuation insurance benefits. The distribution of your superannuation money will depend on whether your self-managed fund allows you to nominate a recipient. Again, this all depends on the fund’s set-up, and the trustees can make these decisions.