SMSF practitioners should be aware legal definitions around whether a stepchild qualifies as a superannuation beneficiary have started to shift in a number of states, with new precedents being set in some jurisdictions, an SMSF legal specialist has noted.
DBA Lawyers senior associate William Fettes said the issue of the status of stepchildren was an evolving legal area and the traditional common law position has been that a stepchild/stepparent relationship ended on the death of the biological parent and on the termination of the spousal relationship.
“That position has been around for some time based on case law, but that position is now not the common law position in the sense that it’s not always going to be that the stepchild/stepparent relationship ceases on the death of the biological parent,” Fettes said during a recent webinar.
“There have been a few cases in Superannuation Complaints Tribunal decisions that have confirmed this and the Queensland Succession Act has been changed, and the Victorian position has been considered in some cases as well.
“Essentially, we now have a new common law position that says you can have a quasi-parental relationship persisting after the death of the biological parent.
“The exact parameters of that relationship aren’t entirely well established. It still might be the case if there is no real relationship of substance between the stepchild and stepparent that persists beyond the death of the biological parent, you wouldn’t have the facts to support that relationship.
“If you still had a close parental-style relationship, I think there is now a common law position that says this would still mean you’re a stepchild.
“This is interesting because the ATO’s only published document on this is the old Interpretative Decision 2011/77.
“Hopefully we are going to get an updated one to clarify this because I do get asked frequently about whether a stepchild is a dependent and the answer is still it depends, and it’s not straightforward anymore like it used to be for some time.”
