Superannuation and your estate plan
Superannuation is often the largest financial asset a person owns. Estate planning that ignores super is incomplete.
Superannuation typically forms the largest financial asset for working-age Australians, but it doesn’t automatically pass through the will. Effective estate planning coordinates the super fund’s binding death benefit nomination with the will to ensure the right beneficiaries receive the super, with the lowest tax outcome.
Super isn’t part of the estate by default
Super is held by the trustee. On death, the trustee distributes it. The will only controls super if the BDBN directs the benefit to the legal personal representative (estate). Without coordination, super and the will can produce conflicting outcomes.
Tax on super death benefits
Tax-dependants (spouse, minor children, financial dependants) receive super tax-free. Non-tax-dependants (adult independent children, other relatives) face 15-30% tax depending on the taxable/tax-free components.
Strategic considerations
For couples, BDBNs typically nominate the spouse (tax-free, simple). For widowed parents leaving super to adult children, the structure matters – paying via a testamentary trust can reduce ongoing tax on inherited income substantially.
SMSFs
Self-managed super funds add complexity – SMSF trust deeds, member balance composition, related-party rules. SMSF estate planning requires specific care and coordination with the SMSF accountant.
Insurance through super
Many super accounts include life insurance. The insurance benefit follows the BDBN unless directed otherwise. Coordinating insurance with super and will is part of comprehensive estate planning.
Summary
Superannuation is often the largest financial asset a person owns. Estate planning that ignores super is incomplete.
Talk to Sam about your situation
If this article raised questions for your own circumstances, Sam Michele offers free 20-minute initial consultations. Learn more about our wills service, or book a consultation.
Related reading
Disclaimer: This article is general information only and does not constitute legal advice. Estate planning is deeply personal - every family's circumstances are different. For advice specific to your situation, please contact Rosewood Succession Solicitors.