Extended Definition of Dependant Offers Estate Planning Opportunities

In light of several cases that have interpreted the definition of ‘dependant’ very widely, it may be that a larger class of persons than previously thought might qualify to receive part of a deceased member’s entitlement from a super fund.

Under SIS Regulation 6.22, an eligible beneficiary of a deceased member’s entitlement under a super fund must be a dependant of the deceased member. The term ‘dependant’ is defined in the Act to include (ie not mean) their spouse, child or someone with whom they had an interdependency relationship.  The use of the term ‘includes’ is critical.  The clause does not attempt to define the concept of ‘dependant’ in full, but just to show some of the people who fall within it.  

The Superannuation Complaints Tribunal has held that a mother was partially dependent on her son because he provided her with handyman assistance.  In another SCT case, the mother was again held dependent on her son because he paid her irregular and varying payments in the three years prior to her death.

These decisions show that it doesn’t take much to establish dependency and that once partial dependency is established the dependant is entitled to part at least of the deceased member’s fund entitlement.

As part of their estate plan a member could provide a chosen person with an interest from the super fund by ensuring that the person met the easily-established status of partial dependency.