There’s nothing like new love. For most of us, we hope new love will grow into old love – a shared life that leads to many happy memories, of house, holidays and children.
One thing a lot of people don’t think about in the throes of a new love is the implications of the new relationship on your personal legal arrangements. That detail is often something we don’t want to consider as, let’s face it, it’s not that romantic.
But preparation is important in life and so it is with personal relationships. Reorganising your legal affairs to reflect your new relationship is a wise course of action that can prevent administrative nightmares at a later time.
Here are some of the key things to consider once you find yourself in a new relationship.
Wills and power of attorney
If you’ve already made a will by the time you find yourself in a new relationship, you may now want to review it to either: 1) include your new partner as a beneficiary of your estate, should you suddenly die or 2) ensure a former partner has no claim on your estate.
Legal experts in wills and estates recommend you review your will every three to five years. In the event of a new relationship, you may wish to amend your will or make one for the first time. Making a new will cancels or revokes any previous wills you’ve made.
Your will can be amended by attaching what’s known as a codicil, a separate document that changes specific provisions of your existing will but leaves all others unchanged. It’s advisable to attach only a few codicils to a will lest it becomes confusing, unwieldy or contradictory. Consult a legal specialist if you’re unsure about whether you should amend a will, or make an entirely new one as a result of the change in your relationship status.
Power of attorney
As with wills, updating any power of attorney you’ve made may be advisable once a new relationship begins. Power of attorney is a legal document that gives the appointee – usually, a close family member – the power to act in your place on financial and other matters for a limited time (general power of attorney) or in a continuing capacity (enduring power of attorney) if you suddenly lose the capacity to make decisions for yourself.
It’s up to you what powers you bestow upon the attorney you choose, from wide-ranging authority to make decisions on your behalf on financial and legal matters, to authority to only make specific decisions on specific issues. You can also choose the circumstances in which the power should be exercised.
In a new relationship, you may wish to appoint your new partner as your power of attorney rather than, for example, an immediate family member. Remember, however, that the person you appoint needs to act in your best interests at all times as they will have access to much of your personal information and be able to act using that information. You should have complete trust in whomever you appoint as power of attorney. If you wish to create a new power of attorney, you will of course be required to cancel any previous appointment.
Superannuation and binding death nominations
While your will dictates who will receive your property, assets and other belongings when you die, your superannuation is not counted as an asset because it is held in trust by your superannuation provider. That means that if you don’t specify to who you want to receive your super, the super fund has full control in deciding who to distribute your benefit to once you die.
To avoid this circumstance, it’s a good idea to nominate the individual you want to receive your super pay-out through what’s called a ‘binding death nomination’. First, check that your super fund offers this option. There is also usually the option to make the nomination either lapsing (i.e. needs to be reviewed every few years) or non-lapsing (permanent).
To make a binding death nomination you need to nominate either a dependant or a legal personal representative. A dependant maybe your new partner, your child (whether biological, step or adopted), or any other person(s) who the superannuation trustee regards as being either wholly or partly financially dependent on you at the time of your death.
It should be noted that in the event you nominate your personal legal representative, this circumvents the trustee arrangements to ensure your super benefit becomes part of your assets and so can be distributed as per the wishes in your will. If you have not made a will, the benefit will be distributed according to intestacy laws.
Obviously one of the benefits of a binding death nomination occurs in the case of blended families, where you may not necessarily want your stepchildren, for example, accessing your superannuation funds when you die. When those funds are considered part of your estate, it is much easier for stepchildren to potentially access the money by contesting your will once you pass, if they do not believe they were adequately provided for in the document.
De facto relationships
While you may not be married, or have any plans to marry, a de facto relationship can still have important legal implications. You’re considered to have been in a de facto relationship if you’ve lived together with your partner for two years on a domestic basis without separation.
Every relationship, however, is different. Other factors such as financial commitment to each other, children from the relationship and joint property ownership will also be taken into account in assessing whether you are or were in a de facto relationship. The point being, the longer you’re together with someone and share your life with them, the more each of you develops rights to each other’s property.
In the event you die before making a will, for instance, your de facto will have a claim on your estate including any property, just as they would if you were married. A de facto partner will also have the right to challenge your will if they believe they were not adequately provided for, claim social security entitlements and receive workers’ compensation entitlements if, for example, you died in the course of your employment.
For these reasons, it’s again advisable to update your will to reflect your wishes in light of your relationship status, de facto or otherwise. By doing so you avoid uncertainty and messy conflicts about your estate once you’re deceased.
Legal advice should be sought
The points made in this article are general in nature. Consulting an experienced legal professional once you’ve embarked on a serious new relationship is the wisest course of action to ensure your most important legal documents are up to date and reflect your wishes as accurately as possible.
At Big Law, our professional team have the expertise needed to guide you through making or updating a will, appointing power of attorney, making a binding death nomination and all other issues associated with new relationship status. Contact us by phone at 1800 431 592 or email [email protected] to schedule an appointment to discuss your situation today.