Financial planning is very much so a “chicken or egg” exercise when it comes down to which part of one’s financial life. Where do you start?
While I love to delve off into economics, investments, strategies, etc. I find my default is to first ensure everything my clients intend to happen, even in the scenario of an unplanned event, still does happen.
Matching their intentions doesn’t equate to an investment strategy tailored to the many questions of a risk profile. And in some circumstances have an alternative outcome in terms of family or corporate laws. It comes down to legal/tax structures and protection plans that provide for a worst-case scenario that can sometimes have a greater weighting to your emotional investments.
Relationships can have a huge impact on and by the above. Where I have seen many misunderstandings are those in same-sex relationships.
Politics aside, legal and financial changes have been largely progressive and can be favourable in the LGBTI community, however, there are a few focus areas in financial planning that can play an important role in an individual way with members of the LGBTI community. Namely, superannuation, estate planning and holding the right protection policy.
In the first instance, there is a little misconception that superannuation can be left to an individual (or group) being passed on unaffected. In a lot of scenarios, this isn’t true. For example, non-financial dependant benefactors or unrelated benefactors can be up for estate or taxation consequences that may be influenced by someone unrelated to you. This is where creating an awareness around superannuation can make a quantifiable difference if ever relied on.
“This is especially so if you have a surviving spouse and have re partnered or have children. There may also be taxation consequences to the nominated beneficiary and it t is important to consider these matters before nominating your beneficiary to your superannuation.” – JM
And the last thing that any same-sex couple may want is for a partner to pass away and the surviving spouse/de facto partner suddenly has to contest with family members of the deceased for what might be rightfully theirs. Where law can favour the family of the deceased, there is a real requirement for a same-sex couple to have the correct planning to favour their intentions in as many real-world cases as possible.
But when we consider superannuation law, it states the ‘spouse’ is defined as someone, regardless of gender, living with you in a relationship as a couple. This sets up some important advantages in a same-sex or unique relationship.
Outside of superannuation, especially for younger couples who have no thought of their super, registering your relationship as ‘de facto’ can work toward keeping any future problems to a minimum.
As the adage goes – a plan with no plan is a plan for failure.
I’ll always give more attention to thinking ahead and what comes into my consideration is if a couple has been in a co-dependant relationship and living together for more than 12 months. It may prove to be important to have a cohabitation arrangement (a nicer name for a binding financial arrangement). A set of rules to follow in a number of situations is always going to make an outcome clearer to see and work toward. Which is what I will always prefer.
“Financial Agreements under the Family Law Act can be entered into before, during or after the relationship and can be particularly beneficial to specify assets that you each bring into the relationship or may inherit to exclude them from any future division should your relationship breakdown or in planning how you wish your assets to be divided.” – JM
When people have a deep understanding of what goes where and how much, there can be a straight-forward solution or strategy to properly minimise the risk it all going pear-shaped and personal belongings start flying out of the window (figuratively speaking).
A conversation with the right professional is a small investment to make in order to get more clarity of your situation. Building certainty is where we take a great deal of pride in the advice we provide to our clients.
I’m a fan of a good conversation so please don’t hesitate to contact me with regard to any of the above.
(***This is General advice only and doesn’t take your personal situation into consideration***)