Interdependent relationships hard to prove within SMSFs

There exists no hard and fast rule for people to prove an interdependent relationship and therefore qualify as a dependent of a deceased person within a self-managed superannuation fund (SMSF) and they will have to work hard to prove their claim.

That is the bottom line of a new analysis of the arrangements by Townsends Business and Corporates lawyer, Jonathan See who says that although an interdependency relationship is the last resort for a person to qualify as a dependant of the deceased member, the person claiming the interdependency relationship still has the burden to prove their relationship exists.

“There is no hard and fast rule in determining the existence of an interdependency relationship between two persons as it depends heavily on their overall circumstances which are usually not at all fours with existing precedents,” his analysis said.

“Evidence such as documents and testimonies must be gathered, thoroughly explained and presented to prove such relationship exists.”

The provisions for people to be considered a death benefit dependant in superannuation have been broadened to include other types of interdependency relationships.

The superannuation death benefit is provided to the spouses and children under 18 years of age of the super fund member, as well as any person with whom they had an interdependency relationship and any person who was their dependant before they passed away.

An interdependency relationship considers people who provide financial, domestic or personal support to each other, live together or have a close personal relationship. The burden to prove this relationship lies on the person claiming to be a dependent of the deceased.

A close personal relationship can be indicated by its duration, the ownership or use of property, the care and support of children, and any evidence to suggest that the parties intend the relationship to be permanent. Superannuation death benefit claims also take into account the degree of emotional support, which eases the inflexibility of several precedents.

Claims made for superannuation death benefits by a person with whom the super fund member had an interdependency relationship require evidence of documents and testimonies, to prove the relationship exists.

Applicants can provide evidence that they were living together in a relationship to claim the benefit upon a super fund member’s passing. This requires some degree of continuity or permanency and includes whether the relationship was intended to be permanent.

Living together is not required in some instances, where two persons were temporarily living apart or if they suffer from a disability.

Claimants can prove an interdependency relationship existed with a super fund member through evidence of frequent financial support towards accommodation, utilities, food or other living expenses.

Evidence of both frequent domestic support and personal care can be used to verify an interdependency relationship. Domestic support can take the form of preparing meals, doing laundry, cleaning, mowing the lawn and gardening. Personal care entails ‘significant care’ provided to a person who is unwell or suffering emotionally.

An interdependency relationship does not exist if a person provided domestic support and personal care to the super fund member under an employment or services contract, or on behalf of another organisation like a government agency or charity.