Australian same-sex couples can legally marry from today and financial advisers are being reminded of the estate planning challenges this historic occasion may trigger for clients.
While the ability to legally wed brings considerable benefits as a result of ensuring greater rights, Wealth Planning Partners' Amanda Cassar is adamant estate planning documents must be reviewed to safeguard those rights.
Financial advisers must remember that, for certain superannuation funds, a binding death benefit nomination made by a client becomes invalid in the event of certain life changes, Cassar said.
"When members sign a binding death benefit nomination for most super funds, it will usually be valid for three years; but in the conditions it can state that it will be invalidated by an event such as marriage or the birth of a child," Cassar wrote in a recent blog.
If estate planning documents aren't updated to reflect that the nominee has become the member's spouse, the member's death could present unexpected and numerous challenges for the spouse.
"They'd still have a right to apply to a trustee and say 'I was the nominee before, but now the spouse', but that could also open the door for others to come in and argue that they have some entitlement also, making the process longer and more drawn out than necessary," Cassar explains.
She added that such restrictions are most common amongst APRA-regulated funds, though similar clauses do exist in some self-managed super fund trust deeds.
"SMSF trustees and all couples looking to wed will want to make sure estate planning documents are reviewed and updated where necessary, including wills, powers of attorney and superannuation nominations," Cassar said.
In 2008, superannuation reforms regarding who constitutes a 'spouse' were legislated to include "persons who live together in a genuine domestic relationship as a couple, regardless of their gender."
ANZ senior economist Cherelle Murphy predicted in September that marriage equality would produce an economic benefit of at least $650 million in the first 12 months - if half of Australia's 47,000 same-sex couples opt to marry in the coming year.