Legal Tip 346: Death, Step Children and Superannuation

Step-children are classed as ‘children’ for the definition of ‘dependant’ under Superannuation law. See the definition of ‘dependant’ and ‘child’ under section 10 of the SIS Act.

SUPERANNUATION INDUSTRY (SUPERVISION) ACT 1993 - SECT 10 Definitions

But once their natural parent has died they would no longer be children of the step parent.


Example

Homer and Marge divorce with Homer taking Ned Flanders in as his husband.

Ned’s children and previous spouse were eaten by sharks – different sharks on separate holidays.

Ned dies and the trustee of the Superannuation fund in which Ned had his super has to pay out Ned’s benefits to either, Homer or the estate – or to Homer’s kids as they are step children of Ned.


But, not in the following situation if Ned actually died after Homer.

Homer and Ned are married. Homer dies first and the children remain living with Ned for a few years. Ned then dies in a bikini waxing incident.

Homer’s children are no longer step-children of Ned for the purposes of superannuation law. They could be dependents (or interdependent) though if they are living with Ned and he is supporting them.

Ned’s super would need to be passed to his estate, then to Homer’s children via the will – if Ned wanted to benefit them from his super.

 

It really is a dangerous world out there @Terry_w given all the various death options in your legal examples!
Otherwise you’ve heard about some really unlucky folks.

Be careful everyone!

 

In that example it is a reason why many will pass death benefits in super through their estate and the importance of checking death nomination validity. That way the SIS Act limit on step children doesnt hinder intended inheritances. If the super member had a death nomination it would be defective and not applied. The fund could also then pay the death benefits to the spouse who could then refuse to give any to the step kids intended to originally inherit.

This regularly gets media focus.