Qld succession law changes tipped to impact SMSFs
Changes to Queensland law regarding the treatment of stepchildren raises important estate planning considerations for SMSFs, and could foreshadow the adoption of similar changes by other states, an industry lawyer predicts.
In early June, Queensland changed the way that stepchildren and de facto spouses are treated under the Succession Act 1981 (Qld), explained Townsends Business and Corporate Lawyers special counsel Brian Hor.
Queensland has changed its laws so that the stepchild 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, he explained.
SMSF clients based in Queensland will therefore need to consider potential family provisions claims that could be made by a stepchild, who may now be eligible to contest a deceased step parent's will.
Mr Hor said de facto marriage relationships have traditionally been treated differently to legally-married relationships.
“For example, where married couples get divorced, a gift to the former spouse under the testator's will is revoked. But when a de facto relationship ends the individual’s will and any gift to a former de facto spouse under it continues until changed or revoked by the testator,” he said.
In states such as NSW, this is still the case, he said.
However, Queensland’s amended Succession Act legislation provides that any gift by will to a de facto spouse is immediately revoked when the de facto relationship ends, he said.
The recent changes to the treatment of stepchildren under Queensland law, he said, are reflective of the fact that families are becoming more blended and diverse.
“It’s a growing recognition of the fact that we have blended families, and that relationships aren’t necessarily formalised as a legal marriage these days, and why should people be disadvantaged by that fact. I think there’s this increasing recognition by the law of modern relationships,” he said.
Mr Hor said these changes in Queensland could potentially also flow on to other states.
“If you look at some recent changes, for example, the foreign investor rules, Victoria was the first state to do that, and then Queensland and NSW followed suit. The fact that one state has done it, could mean that others could well follow suit,” he said.
Currently, NSW does not have the same level of recognition of stepchildren in the situation of a de facto spouse, he explained.
“To make a claim against an estate they need to be what’s called an eligible person, an eligible person in NSW includes your spouse, your de facto, it includes a child, and it includes a former spouse, but it does not include a stepchild,” said Mr Hor.
“That’s one clear difference in NSW, a step-child isn’t an eligible person, unless they are otherwise dependant on you, so someone who was dependant on you and a member of your household, or if they were adopted.”
“Otherwise step-children in NSW are not eligible to claim, unlike the situation in Queensland.”
If NSW were to follow a similar path to Queensland with its treatment of de-facto relationships and stepchildren, however, this could provide more stepchildren with greater ability to make a claim against the estate, he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.