Your Will Is Only Part of Your Estate Plan

What does estate planning actually involve once you have a Will in place? It’s a question we hear often, and it’s a good one to ask.

A Will matters. It names your executor and sets out who receives your estate. But for families with more complex wealth, it is only one part of making sure assets pass the way you intend. Super, trusts, companies, joint property and tax can all shape the outcome in ways a Will alone doesn’t control.

Superannuation and binding death benefit nominations

Super doesn’t automatically form part of your estate. The fund trustee decides who receives your benefit, guided by the fund’s rules and any nomination in place. For many of our clients, it’s one of their largest assets.

A binding death benefit nomination (BDBN) directs the trustee to pay the people you name, provided it is valid. Some lapse after three years, and one that has expired, was witnessed incorrectly or names an ineligible beneficiary may leave the decision with the trustee. For SMSFs, the trust deed matters just as much, setting out which nominations the fund accepts and who controls the fund after your death.

Testamentary trusts

A testamentary trust is created by your Will and takes effect after your death, holding some or all of an inheritance for beneficiaries rather than passing it to them outright. Depending on its drafting, it can help protect assets if a beneficiary faces divorce or bankruptcy, provide for someone young or vulnerable, and distribute income tax-effectively, including to minors, who may be taxed at adult rates on eligible income. It only applies to assets that pass through your estate, so it needs to be planned alongside your super and ownership arrangements.

Ownership structures

Your Will can only deal with what you personally own. Property held as joint tenants generally passes straight to the surviving owner, while a share held as tenants in common passes under your Will. Assets in a family trust belong to the trust, so what matters is who controls it after you’re gone, usually through the appointor and trustee roles. Family companies and businesses need their own succession planning for directorships, voting rights and any buy-sell agreements.

Tax considerations

Australia has no inheritance tax, but inheritances aren’t always tax-free. Super death benefits paid to a spouse or other tax dependant are generally tax-free. Paid to an adult child, the taxable component can attract tax of up to 15% plus the Medicare levy, or more where an untaxed element is involved. Beneficiaries also generally inherit the original cost base of assets such as shares and property, so gains built up over your lifetime may become theirs when they sell. Two assets of equal value can be worth quite different amounts after tax.

Estate equalisation and providing for different family members

Fair doesn’t always mean equal. If one child is taking over the family business or farm, leaving it to them and splitting everything else evenly may leave their siblings well behind. Estate equalisation uses other assets, such as investments, super or life insurance, to balance each share. Blended families, beneficiaries with additional needs and earlier gifts or loans to children all call for the same careful thinking, and getting it right reduces the risk of a costly family provision claim.

Bringing it all together

Each of these areas affects the others. A new Will paired with an outdated super nomination, or an equal split that ignores tax, can undo good intentions. The best estate plans come from your advisers working together:

• Your wealth adviser reviews how your super, SMSF, investments and insurance fit your goals
• Your accountant advises on tax, trusts, companies and cost bases
• Your estate planning lawyer prepares your Will, testamentary trusts and powers of attorney

Your plan should also be reviewed after major life events such as marriage, separation, new grandchildren or selling a business.

How Hewison can help

At Hewison Private Wealth, estate planning is part of every client conversation. Our Wealth Advisers can review your nominations, SMSF deed, ownership and insurance, and work alongside your accountant and lawyer so your plan holds together. To review how your wealth will pass to the next generation, please get in touch with your Hewison Wealth Adviser. Start a Conversation.