With the advent of same sex marriage (effective 9 January, 2018), more de facto couples have the opportunity to become legally married. This article outlines the benefits of being married compared to remaining in a de facto relationship for couples when considering their superannuation death benefit nominations.
Superannuation law permits the trustee of a super fund to pay a benefit upon the death of a member to a dependant or legal personal representative of the member. A dependant includes a spouse of the member, at the time of death, while a spouse includes a person who is legally married to the member, a person in a registered relationship with the member and a person who lives with the member on a genuine domestic basis in a relationship as a couple (de facto spouse).
A spouse who is legally married to the member need only prove the marriage, usually by providing a marriage certificate (if necessary). If married to the member, they are a dependant.
To qualify as a ‘de facto’ spouse, the person needs to prove, at the time of the member’s death that they lived with the member on a genuine domestic basis in a relationship as a couple.
There is no prerequisite for the relationship to exist for a required length of time, merely that it existed at the time of the member’s death. However, the duration of the relationship would still be a relevant factor in a trustee’s determination.
Alternatively, a de facto spouse may qualify as a dependant if they can prove they are financially dependent on the member or are in an interdependency relationship with the member. Whatever route a de facto spouse takes requires proving the relationship or financial dependency to the trustee’s satisfaction.
Proving that a couple live together may seem relatively straightforward, however, commonly in situations where disputes arise, the evidence of the competing parties may conflict. Proof of living arrangements may be complicated where, for example, the member has mail delivered to a different residential address, a lease was in one person’s name or the member died while in an aged care facility or hospital. Generally, objective evidence by independent parties may be of greater value than evidence of the de facto spouse (and their friends or relatives) which may be considered self-supporting and therefore of lesser value.
In a case before the Superannuation Complaints Tribunal (SCT), the trustee of the super fund exercised discretion to pay 100 per cent of the benefit to the deceased member’s de facto spouse, to the exclusion of his children from a former marriage, aged 17 and 21 years. The de facto spouse asserted that she was in a relationship as a couple with the deceased member for five years and they lived together in her house for three years prior to his death. Her friend and relative also gave evidence to that effect.
However, there was conflicting evidence of the deceased member’s residential address during that three-year period. The death certificate showed the deceased’s place of residence was a different address, which corresponded to the address on a tax invoice issued four months prior to the date of death.
Yet another address was provided for the deceased member in respect of an account for legal fees, two years prior to the member’s death. After weighing the evidence of the de facto spouse, her friend and relative against the other objective evidence, the Tribunal concluded that on the balance of probabilities, they were not living together and she did not meet the definition of a spouse.
The SCT also considered that if the couple weren’t living together, an interdependency relationship did not exist and there was no evidence of financial dependency. Bearing on the SCT’s decision to distribute the benefit, was the deceased member’s wishes. It was clear the member’s intention was for the de facto spouse to receive all of his superannuation benefits. The member had nominated his superannuation to be paid to his estate and his will provided for his de facto spouse to be the legal personal representative and sole beneficiary of his superannuation and estate. He gave reasons in his will which included that he had made adequate provision for his children during his lifetime. Ultimately, the SCT determined to distribute the 40 per cent of the benefit to the financially dependent, minor child, 30 per cent to the adult child, and 30 per cent to the legal personal representative.
Of interest, it is the SCT’s view that it is “inappropriate to speculate on the nature of the relationship the deceased member had with his children”. A child, similar to a married spouse, is strictly a dependant under super law. Perhaps these comments could also apply to the relationship between married spouses.
In another SCT case, a dispute arose as to whether a de facto spouse was living with the deceased on a genuine domestic basis in a relationship as a couple at the time of death. The member had moved into an aged care facility one month before his death and spent the last two weeks of his life in hospital.
The fact that a genuine de facto relationship had existed for over 10 years was not in dispute. The dispute was whether that de facto relationship still existed at the time of the member’s death due the couple living apart. Evidence of two doctors supported that the relationship existed up until the time of death. Based on this independent evidence and evidence of the de facto spouse’s presence at the bedside of the deceased for the last two weeks of his life, the SCT was satisfied that although the couple weren’t living together at the time of the member’s death, the de facto spouse was very present in the deceased member’s life and continued to provide emotional support until the date of his death. It is difficult to imagine this dispute arising if the couple were married.
Existence of a de facto relationship
Although trust deed provisions and evidential requirements may differ according to the super fund, generally the trustee has to consider a wide variety of factors relating to the particular relationship, to determine whether a de facto relationship exists.
These include but are not limited to:
- The duration of the relationship;
- Whether or not a sexual relationship exists;
- The ownership, use and acquisition of property;
- The degree of financial interdependence, and any arrangements for support, between or by the parties;
- The care and support of children;
- The reputation and public aspects of the relationship; and
- The degree of emotional support.
The following SCT case illustrates the difficulties in proving a de facto relationship exists in volatile relationships. Despite undisputed evidence that a de facto relationship existed for three to five years, the de facto spouse’s claims were rejected and the trustee exercised discretion to pay 100 per cent of the benefit to the legal personal representative (LPR). The member made no nomination of preferred beneficiary nor left a will and the benefit would have formed part of the estate. The trustee noted that payment to the estate would allow the de facto spouse to prove his claim in the Supreme Court under the intestacy provisions.
The SCT reviewed the trustee’s reasons for finding the de facto relationship had ceased to exist before the member died. The trustee gave little or no weight to evidence of the parties to the dispute (the de facto spouse and the LPR) as it was “conflicting, self-supporting and contradictory”. Instead it turned to objective, independent evidence in police and coroner’s reports to determine whether the de facto relationship ceased four days prior to the date of death, as alleged by the LPR.
After examining the objective evidence, the SCT could not conclude that the police or the coroner believed the relationship had ended at the time of the member’s death. The LPR failed to prove the relationship ended. Consequently, the SCT set aside the trustee’s decision and determined the de facto spouse was a dependant and should receive 100 per cent of the benefit.
This case highlights the potential hurdles faced by a de facto spouse in proving their claim as a dependant. Equal conflicting evidence of the existence or termination of the relationship was produced by the parties to the dispute. The trustee relied on objective and independent evidence, however, considering the comments of the police and coroner were adverse to the de facto spouse and the nature of the relationship, their views may have influenced the trustee’s decision.
The trustee must consider the nature of the relationship to determine whether a de facto relationship exists. In contrast, a spouse who is married to the member is strictly a dependant under super law and the nature of the relationship is unlikely to be called into question. Obviously, evidence that a married couple have separated would be considered relevant in the exercise of trustee discretion.
Another possible option may be for the couple to register their relationship within their state/territory (where available). The trustee should acknowledge someone in a registered relationship as the spouse of that person.
There may be many reasons why a couple will or won’t marry. Marrying can avoid some of the obstacles of proving that a de facto relationship exists. Marriage, as formal recognition of the relationship may reduce the risk of claims by competing interests, by alleviating any doubts that the couple were mutually committed to a shared life together.
Claudine Siou is technical services manager at ANZ Wealth.