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 assume estate planning just means "writing a will," and a will certainly matters — 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 too, and getting any one of them wrong can have significant consequences. This article is general information only, not personal, legal, or tax advice.

Why estate planning 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, the family home, possibly insurance policies or a trust structure. At the same time the risks increase: the chance of a health event that affects 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 having to navigate difficult legal and financial situations without the right tools in place (MoneySmart, https://moneysmart.gov.au/wills-and-estate-planning).

A valid will — the foundation, but only the start

Your will directs how your "estate" assets are distributed when you die. Estate assets are the things owned in your personal name: bank accounts, shares, real estate held in your own name, vehicles, and personal belongings. Without a valid will you die "intestate," and each state has its own formula for distributing your assets — a formula that may not match your wishes at all, 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 it should be updated whenever your circumstances change significantly. The crucial thing to understand, though, is that a will does not control everything you own — and the biggest exception catches almost everyone out.

Superannuation death nominations — the part your will doesn't cover

This is the one that surprises most people: your will does not automatically cover your superannuation. Super sits outside your estate under Australian law, and the trustee of your fund has the power to decide who receives it — unless you have a valid death benefit nomination in place. A binding lapsing nomination instructs your fund to pay a specific person or persons and is legally binding on the trustee, but it expires every three years and must be renewed (many people renew it once and then forget about it for a decade). Some funds also offer a non-lapsing binding nomination that doesn't expire. A non-binding nomination merely guides the trustee, who can override it if they think another arrangement is more appropriate. And if you're already drawing an account-based pension, a reversionary pension automatically continues to your nominated spouse after your death, with no trustee discretion involved.

Who can actually receive your super death benefit is set by law. The eligible recipients are your spouse or de facto partner, your children of any age, anyone financially dependent on you, someone in an interdependency relationship with you, or your estate (your legal personal representative). Paying to your estate routes the money through your will — useful for flexibility, but it involves more steps. Note that a non-dependant can only be paid a lump sum, not a continuing income stream (ATO, https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/superannuation-death-benefits).

The tax angle is where real money is at stake. Super paid to a tax dependant — your spouse, or a financially dependent minor child — is generally tax-free as a lump sum. Super paid to an adult independent child (say, a 40-year-old earning their own income) is taxed: on the taxable component's taxed element, the rate is a maximum of 15% plus the 2% Medicare levy, so roughly 17% when paid directly to them (ATO, https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/superannuation-death-benefits; MoneySmart, https://moneysmart.gov.au/how-super-works/tax-and-super). On a $500,000 super balance that is all taxable component, that's around $85,000 in tax — tax that can often be substantially reduced or eliminated with different planning. (One technical point: if the benefit is paid through your estate rather than directly to the individual, the 2% Medicare levy generally isn't added, so the rate on the taxed element is closer to 15%.)

Enduring power of attorney — the document for while you're still alive

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 the mental capacity to do so yourself. "Enduring" means it continues even after that loss of capacity, whereas a general power of attorney lapses the moment you can no longer make decisions. An EPOA covers things like operating your bank accounts, selling property, dealing with Centrelink, managing your super, and paying your bills. Without one in place, your family may need to apply to a state tribunal — NCAT in New South Wales, VCAT in Victoria, and their equivalents elsewhere — to get legal authority to act on your behalf, a process that 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, so what you need depends on where you live (we cover the attorney's duties in detail in a companion piece on acting as someone's attorney).

Enduring guardianship and advance care directives — your personal and medical wishes

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 — decisions such as what medical treatment you consent to, where you live, and what care you receive. An advance care directive, sometimes called a living will, lets you document your wishes about medical treatment in advance — for example, whether you want life-sustaining treatment in particular circumstances — taking the guesswork out of difficult decisions for your family and doctors. Without these documents, medical staff will fall back on a "responsible person" hierarchy defined by law, usually your spouse and then your adult children, who may not know your preferences and may disagree among themselves. There's a separate article on enduring guardianship that walks through the state-by-state differences.

Testamentary trusts — flexibility and protection through your will

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 the distributions. These trusts are particularly valuable in three situations. The first is where you have minor beneficiaries: under Australian tax law, income distributed from a testamentary trust to a minor can be taxed at ordinary adult marginal rates rather than the penalty rates that apply to most of a child's unearned income (which run up to 47% on amounts above $416 a year). A grandparent leaving $500,000 to a testamentary trust that distributes to grandchildren could save the family tens of thousands in tax over time. The second is asset protection — shielding a beneficiary's inheritance from their creditors or a relationship breakdown. The third is flexibility, giving the trustee the ability to spread income among several family members to reduce the overall tax. Testamentary trusts are more complex to set up and administer than a straight distribution through a will, so a solicitor experienced in estate planning is essential.

Asset ownership structures — how you hold things decides who gets them

How you own your assets now affects who gets them when you die, sometimes overriding your will entirely. Holding an asset as joint tenants means you and a co-owner (typically a spouse) each have an equal, undivided interest, and if one of you dies the survivor automatically inherits the whole asset — it bypasses your will. That's usually what couples want, but if you're in a second marriage with children from a previous relationship, it may not be. Holding as tenants in common means each owner holds a specified share that passes through their will, so 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. (Our companion piece on joint tenancy versus tenants in common goes deeper here.) And assets held in a family trust or a company are not personal assets at all — they won't be distributed by your will, and you'll need specific advice on how those structures interact with your estate plan.

Worked examples

These show how the pieces play out in practice. They are illustrative only — not personal, legal, or tax advice, and the right structure always depends on the full picture.

Margaret, 73 and widowed, has $450,000 in superannuation (all 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 is a non-dependant for tax purposes, so the taxed element is taxed at a maximum 15% plus the 2% Medicare levy — around $76,500, roughly 17% of the balance, paid directly to him (ATO, https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/superannuation-death-benefits). On these facts, it is generally rational for Margaret to get coordinated advice on whether to direct her super to her estate and use a testamentary trust to hold and distribute the assets in a more tax-effective way over time, or — if her sister, whom she genuinely financially supports, is an eligible dependant — to consider that the picture changes entirely, because a payment to a tax dependant is generally tax-free. The lesson isn't that any one answer is right; it's that a binding nomination made without understanding the tax impact can quietly cost the family tens of thousands.

Robert and Susan are in their late sixties and recently married — it's a second marriage for both, and each has adult children from their first. They bought their new home together and, without thinking much about it, took title as joint tenants. On these facts, joint tenancy means that whichever of them dies first, the survivor automatically inherits the entire home, and it never passes through the deceased's will — so the deceased's own children could receive nothing from the family home, regardless of what their will says. If Robert and Susan each want their share of the home to ultimately benefit their own children, it is generally rational for them to consider holding the property as tenants in common in defined shares, with each share directed through their will (perhaps via a testamentary trust that lets the survivor live in the home for life before the share passes to the children). They'd also want their wills, their super nominations, and their powers of attorney all reviewed together, because in a blended family the interaction between these documents is exactly where things go wrong. The fix is straightforward while both are well; it is difficult or impossible to unwind afterwards.

Common mistakes to avoid

A handful of errors recur. People forget to renew their binding nominations, which lapse after three years — so put a reminder in your calendar now. They assume their will covers their super, when it doesn't unless they've specifically directed the super to their estate with a valid nomination. They use joint tenancy when they actually need tenants in common, which especially bites in blended families. They have no enduring power of attorney, which is the gap most likely to cause an immediate crisis, because incapacity can strike at any age, not just at the end of life. They overlook testamentary trusts even when there are minor beneficiaries, significant assets, or complex family situations where the tax and asset-protection benefits would be substantial. And they never review the plan, even though life keeps changing and the plan needs to keep up.

When should you review your estate plan?

Certain life events should always trigger a review: marriage, separation, or divorce; the birth of a child or grandchild; a significant asset change such as selling a business, receiving an inheritance, or buying a property; the death of a beneficiary, executor, or attorney; or moving between states, since the laws differ. It's also worth a look at key ages — turning 55, when downsizer contributions become available; 60, when most people can access their super; and 67, the current Age Pension age. Beyond those triggers, review the plan every three to five years regardless, because nominations lapse, laws change, and circumstances shift.

What to do next

Estate planning involves two different kinds of professional, and you generally need both. A solicitor — ideally one specialising in wills and estates — prepares your will, your powers of attorney, and your guardianship documents, and can structure a testamentary trust if one suits you. A financial adviser reviews your superannuation death nominations, assesses how a benefit payment will affect your surviving spouse's Age Pension entitlements (Services Australia, https://www.servicesaustralia.gov.au/what-happens-to-your-payments-when-partner-dies), and helps coordinate your super and estate strategies. These pieces interact: 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 can't be undone at all.

Sources

• ATO — Superannuation death benefits
• MoneySmart — Wills and estate planning
• MoneySmart — Tax and super
• Services Australia — What happens to your payments when your partner dies