Last time I wrote about the connection between superannuation and wills, I said that if you do not have a binding death benefit nomination for your superannuation it will go to your spouse which may be a 'domestic partner'. Today I’ll explain further what that means.
Who is my domestic partner?
If you are living with a person (whether of the opposite or same sex) on a permanent domestic basis in the one shared residence then you are probably in a domestic relationship. Marriages are easy to identify - a religious or civil ceremony has occurred. Domestic relationships are not so easy to identify and are certainly difficult to define as having started on a particular date. The commencement of a domestic relationship is more like osmosis. It happens organically over a period of time. A couple might be able to state that three months ago they were not in a domestic relationship, and although they acknowledge that they are in a domestic relationship now, they cannot identify one particular date over the last three months which swings the opinion from two solitary lives to a domestic relationship. For the purposes of superannuation there is no minimum time limit that the domestic relationship must exist in order to qualify for the benefit.
A couple of examples
Jason is 25 years old, in full-time employment, still lives at home, but has a female friend Kylie. They have been in a close relationship for three years. Jason does not have a Will. He has $10,000 accumulated in his superannuation fund plus an insurance death benefit of $250,000. No binding nominations been made. Should Jason die at this point, the superannuation fund is likely to pay the benefit to his parents because he was in an interdependent relationship with them, or they might pay to his estate. Without a will Jason’s parents are his next of kin and will be entitled to his entire estate.
Six months later Jason has moved out of home and is sharing a house with Kylie. They have been in the house for nearly 6 months when Jason dies suddenly. The superannuation will be paid to Kylie as his domestic partner. His estate, because he did not have a Will, will again go to his parents as the next of kin. Kylie only qualifies as the next of kin for his estate if they have been together for two years as a couple.
Let’s suppose Kylie and Jason separate after a few months of sharing the house and Kylie moves out. Nicole then moves into the spare bedroom and shares the rent. Six months later, Jason is still unattached, but he and Nicole have taken advantage of the moment as consenting adults from time to time. Is it friends with benefits? Is it a more modern version of the domestic relationship? Or is it none of these? This time Jason has completed a binding death nomination naming his estate as the beneficiary so the nature of the relationship does not matter.
It is so important to make a binding death benefit nomination, particularly as a young adult. Of course, you should make a Will as well. For advice on this and other will related matters contact the Will & Powers of Attorney team on 03 5445 1000.