Estate planning

Your will does not cover your super

Superannuation is held in trust, and it is not an asset of your estate unless it is directed there. The trustee of your fund decides who receives it, guided by whatever nomination you have made. If your nomination has lapsed, or you never made one, the decision is theirs within the rules — not your executor's.

People update their wills after a divorce, a remarriage or a death in the family and quite reasonably assume that covers everything. It does not cover the super.

Binding nominations, and keeping them valid

A binding death benefit nomination directs the trustee, provided it is validly made and still in force. In most large funds it must be witnessed by two adults and lapses three years after it was signed or last confirmed — and a lapsed nomination is simply a non-binding one, which puts the decision back with the trustee.

Self-managed funds work differently, and this is regularly got wrong in both directions. The three-year rule in the superannuation regulations does not apply to an SMSF, so a nomination there can be non-lapsing — but only if the fund's own deed allows it, and many deeds adopt the three-year rule anyway. Whether yours lapses is a question about your deed, not about the law in general.

A nomination also has to be in favour of someone eligible — broadly a dependant or your legal personal representative. A nomination naming someone who does not qualify simply fails. Moneysmart's guidance on super and death benefits covers the general position.

We check what is currently in place across every fund you hold, which is usually the first time anyone has looked at all of them together.

The tax an adult child pays

Super left to an adult child who was not financially dependent on you is taxed on its taxable component. On a substantial balance that is a real amount, and it is the single most common avoidable cost in an estate.

There are ways of changing that outcome, and which of them suit depends on your age, your health, your balance and whether you are already drawing a pension. Some involve acting well in advance. This is a conversation worth having earlier than feels necessary.

Assets outside your will

Super is the main one, but not the only one. Assets held in a family trust are owned by the trust, not by you, so your will does not deal with them — control passes according to the deed and whoever holds the appointor role. Company shares pass under your will, but control of the company may not follow in the way you expect. Co-owned property depends on how the title is actually held, and the two forms behave oppositely. As joint tenants, your share passes to the surviving owner by survivorship and your will does not touch it. As tenants in common, your share is yours to leave and does pass under your will. People are often certain which they hold and are wrong — it is worth checking the title rather than remembering.

For a business owner, this is where estate planning and business advisory meet, and where getting it wrong causes the most damage — usually to a family already having a difficult year.

We work alongside your solicitor

We do not draft wills or powers of attorney; that is legal work and it should be done by a solicitor. What we do is make sure the financial structure underneath supports what the will is trying to achieve, and that the assets your will cannot reach are directed properly by other means.

If you do not have a solicitor, we will say so plainly rather than working around it.

Review it when something changes

Estate planning is not a document you complete. Marriage, separation, a death, a new child, selling a business, starting a pension — each of these can undo an arrangement that was correct when it was made. A review every few years, and after anything significant, is usually enough.