ArticleBreak The Bias – Leaving a Legacy for Blended Families

International Women’s Day on Tuesday 8th March celebrates the achievements of women and challenges us to imagine a world free of gender inequality.

While the gender pay gap has narrowed slightly, the gender gap in superannuation savings remains substantial.

  • Women retire with 24% less super than their male counterparts.
  • Based on full time earnings, Australian women earn 14.1% less than men and make up over 67% of part time workers which further exacerbates the pay gap.
  • Australian women live, on average, 4 years longer than men, and with their lower super balances, are at risk of exhausting their super balances much earlier.*

This makes retirement saving, inheritance and estate planning important issues to address for Australian women, and none more so than for women in blended families.

In recent years as families are becoming increasingly “blended” with new families being formed due to separation, divorce or death of a partner, the courts are taking a tougher approach to the growing number of inheritance disputes over assets in self-managed super funds. This is creating new issues for Will-makers, trustees, and beneficiaries.

Women today need to take control of their financial future; safeguard their retirement wellbeing and any legacies they wish to bequest.

It is important to understand that superannuation and life insurance do not automatically form part of a person’s estate to be dealt with by their Will. Death benefits can easily end up in the wrong hands (i.e.not where you wanted the money to go!) unless appropriate instructions are put into place. It’s complex and therefore strategic advice and planning is required to secure a structure suitable for all parties.

Some matters to consider:

  • Biological children – will a second husband (not the biological father) adequately look after your biological children upon your death? Even with the best of intentions, how can this be achieved and protected?

 

  • Step-children – don’t meet the definition of a dependent under the Superannuation Industry (Supervision) Act 1993 (SISA) Therefore they can’t be direct beneficiaries of the superannuation fund unless they have been legally adopted. How do you ensure that no one misses out?

 

  • Binding Death Benefit Nomination (BDBN) – What is a BDBN and how does it work? Firstly, it needs to be valid or only the lawyers win! A valid BDBN ensures a direct obligation on the trustee to pay death benefits in accordance with the wishes specified by the deceased.

 

  • Who controls the purse strings? – Don’t let your superfund benefits or your children’s legacy be derailed. In the event of a second marriage, or if one spouse dies, who decides what happens to your member benefits?

 

It is vital that women know their rights and protect their finances now and into the future.

Ladies, I implore you today, on International Women’s Day, when women are vocal and focused on continuing to strive for an equitable world inclusive for future generations of girls, that you take the time to look after yourself and consider your future.

Check that your estate and retirement plans are in place and are robust enough to protect you and your loved ones. Ask me how.

Sharon Gdanski

Superannuation Director

 

* Source: https://www.womeninsuper.com.au/content/the-facts-about-women-and-super/gjumzs
Author: Sharon Gdanski - Director, Superannuation