Keith & Nicole – binding death benefit nominations for blended families

Keith and Nicole are both divorced and have children from previous marriages. Nicole’s children, Connor and Isabella, come to live with Keith and Nicole after they get married. After a near miss during a special effects mishap for his latest film clip, Keith decides that he had better get his affairs in order. Keith has a healthy member balance in his superannuation fund and decides that he would like his death benefit to go to Nicole in the first instance. In the event that Nicole pre-deceases Keith, he would like his death benefit to be split equally between their children (including Connor and Isabella) – since a ‘child’ includes step-children for these purposes and children are classified as ‘dependants’ who are eligible to receive death benefits.

Keith is surprised to discover that the ATO view is that a step-child will cease to be a dependant of a step-parent upon the death of the natural parent. Therefore, if Nicole pre-deceases Keith, Connor and Isabella will no longer be considered Keith’s step-children and they may no longer be eligible to receive his death benefit (unless they are otherwise financially dependent on Keith). To avoid any risk of an invalid nomination, Keith’s wishes could be achieved by directing the death benefits which would otherwise be paid to Connor and Isabella into his estate. Keith’s will could then provide for these amounts to be distributed to Connor and Isabella.

Partner Paul Williams practices in taxation law and estate planning. The Tax & Estate Planning Team offers the ideal mix of legal, tax and accounting skills to ensure that your testamentary documents achieve your estate planning objectives.

 

Recent Articles

Farmers make use of RAA subsidies for succession & estate planning advice

25th September 2020

This blog article follows on from our previous article Get in quick! Subsidised business & estate planning advice for farmers... Read More

JobKeeper extension – what you need to do as a business or not-for-profit

25th September 2020

The ATO has released a practical factsheet outlining all the practical steps required to be followed for businesses or... Read More

Withdrawing super before succumbing to a terminal illness – Act sooner rather than later!

15th September 2020

A recent ATO private ruling considered the implications of withdrawing superannuation when a member is terminally ill. Before passing away,... Read More

Our 2020-2021 Internship Program is open for applications

01st September 2020

In 2019 Roberts & Morrow launched the Internship Program with the University of New England (UNE) where we offered... Read More