What is estate planning in Australia?

Estate planning is the process of organising what happens to your money, property, and healthcare decisions — both if you become unable to manage them yourself, and when you eventually pass away. It's about making sure the right people can act on your behalf, that your assets go to the people you intend, and that your family isn't left dealing with an expensive, stressful mess at an already difficult time.

Most Australians think estate planning means writing a will. A will is important — but for retirees, it's often the least complicated piece. Your superannuation, your powers of attorney, your property ownership structure, and your medical wishes all need to be considered separately. Get any one of them wrong, and the consequences can be significant.

Why it matters more after 60

The older you get, the more complex your financial affairs tend to be — a super fund, perhaps an investment property, shares, a family home, possibly insurance policies or trust structures. At the same time, the risks increase: the chance of a health event affecting your mental capacity, the death of a spouse, or a sudden change in family circumstances.

Estate planning isn't morbid — it's practical. It's how you stay in control even when circumstances change, and how you protect the people you care about from navigating difficult legal and financial situations without the right tools in place.

The six elements of a complete Australian estate plan

1. A valid will

Your will directs how your "estate" assets are distributed when you die. Estate assets are things owned in your personal name: bank accounts, shares, real estate held in your name, vehicles, personal belongings.

Without a valid will, you die "intestate" — and each state has its own formula for distributing your assets. That formula may not match your wishes, especially if you have step-children, a blended family, or specific intentions for particular assets.

A will must be signed and witnessed correctly to be valid. It should name an executor (the person responsible for carrying out your wishes), and be updated whenever your circumstances change significantly.

2. Superannuation death nominations

This is the one that surprises most people: your will does not automatically cover your superannuation. Super sits outside your estate under Australian law. The trustee of your super fund has the power to decide who receives it — unless you have a valid, binding death benefit nomination in place.

A binding lapsing nomination instructs your fund to pay to a specific person or persons. It's legally binding on the trustee — but it expires every three years and must be renewed. Many people renew it once and forget about it.

A non-binding nomination guides the trustee but doesn't bind them. A reversionary pension (if you're drawing an account-based pension) automatically continues to your nominated spouse after your death, without any trustee discretion.

Who can receive your super death benefit? Eligible recipients are your spouse or de facto partner, your children (any age), anyone financially dependent on you, someone in an interdependency relationship with you, or your estate (legal personal representative). Paying to your estate routes it through your will, which can be useful for flexibility, but involves more steps and potential delays.

The tax angle matters significantly. Super paid directly to your spouse or minor children is generally tax-free. Super paid to adult independent children is taxed — on the taxable component, they'll face roughly 17% (15% plus Medicare levy). On a $500,000 super balance, that's around $85,000 in tax that could potentially be reduced or eliminated with different planning.

3. Enduring Power of Attorney

An Enduring Power of Attorney (EPOA) authorises someone you trust — your spouse, a child, a close friend — to manage your financial and legal affairs if you lose mental capacity. "Enduring" means it continues even after that loss of capacity (a regular power of attorney lapses the moment you can no longer make decisions).

The EPOA covers things like: managing your bank accounts, selling property, dealing with Centrelink, managing your super, and paying your bills.

Without an EPOA in place, your family may need to apply to a state tribunal (NCAT in NSW, VCAT in Victoria) to get legal authority to act on your behalf. That process can take months, cost thousands of dollars, and cause enormous stress at an already difficult time. Each state and territory has its own laws and forms for EPOAs.

4. Enduring Guardianship and advance care directives

Separate from financial powers, an Enduring Guardian (or Medical Enduring Power of Attorney, depending on your state) authorises someone to make personal and medical decisions for you if you can't make them yourself — what medical treatment you consent to, where you live, what care you receive.

An Advance Care Directive lets you document your wishes about medical treatment in advance: whether you want life-sustaining treatment in specific circumstances, for example. It removes the guesswork from difficult decisions for your family and doctors.

Without these documents, medical staff will follow a "responsible person" hierarchy defined by law — usually your spouse, then adult children. They may not know your preferences, and they may disagree with each other.

5. Testamentary trusts

A testamentary trust is a trust created by your will that comes into effect when you die. Rather than leaving assets directly to a beneficiary, you leave them to a trust — with a trustee managing distributions.

Testamentary trusts are particularly valuable when there are minor beneficiaries (children or grandchildren). Under Australian tax law, income distributed from a testamentary trust to minor beneficiaries can be taxed at adult marginal rates — not the children's penalty rates that apply to most unearned income (up to 47% on amounts above $416). A grandparent leaving $500,000 to a testamentary trust that distributes to grandchildren could save the family tens of thousands in tax over time.

Testamentary trusts also provide asset protection from a beneficiary's creditors or relationship breakdown, and flexibility to distribute income among multiple family members to reduce overall tax. They're more complex to set up and administer than straight distribution through a will — but for significant estates or complex family situations, the benefits can be substantial.

6. Asset ownership structures

How you own your assets now affects who gets them when you die.

Joint tenancy means you and a co-owner each have an equal, undivided interest. If one of you dies, the surviving owner automatically inherits the whole asset — bypassing your will entirely. That's usually what couples want. But in a second marriage with children from a previous relationship, it may not produce the outcome you intend.

Tenants in common means each owner holds a specified share, which passes through their will. If you want your share of a property to go to your children rather than a new partner, tenants in common is the structure you need.

Assets held in a family trust or company are not personal assets and won't be distributed by your will. If you have these structures, specific advice is needed about how they interact with your estate plan.

A quick example: the cost of getting super wrong

Margaret is 73 and widowed. She has $450,000 in superannuation (entirely taxable component) and a binding nomination leaving everything to her son James, who is 48 and works full-time. If Margaret dies without changing anything, James faces approximately $76,500 in tax on the super payout — around 17% of the balance.

Alternatively, if Margaret directs her super to her estate and structures distributions through a testamentary trust, income can be distributed to James and his family more tax-efficiently. Or, if Margaret's sister (whom she financially supports) qualifies as a financial dependant, naming her as beneficiary means no tax at all.

The right structure depends on the full picture — which is why coordinating your solicitor and your financial adviser matters.

Common mistakes to avoid

Forgetting to renew binding nominations. They expire after three years. A nomination you set up in 2018 may no longer be in force.

Assuming your will covers your super. It doesn't, unless you've specifically directed your super to your estate — and even then, you need a valid nomination to make that happen.

Using joint tenancy when you need tenants in common. Particularly relevant in blended families, or where you want your share of an asset to go to your children rather than a surviving partner.

No Enduring Power of Attorney. This is the one most likely to cause immediate problems — because incapacity can happen at any time, not just at the end of life.

Ignoring testamentary trusts. Where there are minor beneficiaries or significant assets, the tax and asset-protection benefits can be substantial.

Never reviewing your plan. Life changes. Your estate plan needs to keep up.

When should you review your estate plan?

Review your estate plan after marriage, separation, or divorce; after the birth of a child or grandchild; after a significant asset change; after the death of a beneficiary, executor, or attorney; or if you move between states. Key ages to review include 55 (downsizer contributions become available), 60 (super access), and 67 (Age Pension age). Even if nothing changes, review every three to five years — nominations lapse, laws change, and circumstances shift.

What to do next

Estate planning involves two different types of professionals, and you generally need both.

A solicitor (ideally one specialising in wills and estates) to prepare your will, powers of attorney, and guardianship documents — and potentially structure a testamentary trust.

A financial adviser to review your superannuation death nominations, assess how benefit payments will affect your surviving spouse's Age Pension entitlements, and co-ordinate your super and estate strategies.

These pieces interact in ways that matter. A will drawn up without considering the super position, or a nomination made without understanding the tax impact, can create problems that are costly to unwind — or that can't be undone at all.