Estate Planning 101: How to Protect Your Family And Avoid Common Mistakes

Why Estate Planning Matters

Making a Will is something many of us put off or consider too expensive. But estate planning isn’t just for older people or the wealthy, and it isn’t just about having a Will. It’s something everyone should consider, especially as life doesn’t always go the way you plan.

Most people know they should have a Will. A Will allows you to decide who will inherit your hard-earned assets upon your death. But a Will on its own may not be enough to fully protect your family or ensure your wishes are carried out.

There are some assets – such as superannuation, jointly owned property, or family trusts – that appear to be ours, but aren’t automatically covered by a Will. And what if something happens to you and you can’t make decisions for yourself? People often overlook the consequences of losing capacity. 

This is where estate planning comes in. It’s a bigger-picture plan for you and your family’s future. A well-structed estate plan:

• Directs who should receive your assets

• Appoints someone to make decisions if you lose capacity

• Makes sure your superannuation goes where you want it to

• Reduces the chance of family or tax disputes

At a minimum, an estate plan should include:

• A Will

• An Enduring Power of Attorney

• An Appointment of Medical Treatment Decision Maker

• A Binding Death Benefit Nomination for your super

If you control a family trust or company, it may also include:

• A company power of attorney

• A deed of successor appointor
  

After 1 July 2025, some people may also want to add a:

• Nomination of a Restrictive Practices Substitute Decision-maker.
  This lets you appoint someone to make decisions about any action that restricts your rights or freedom of movement if you’re in aged care and can’t decide for yourself. It’s a way to make sure that such decisions are made by someone who understands your values.

Together, these documents provide comprehensive peace of mind. They protect your family, ensure your wishes are known, and reduce confusion and conflict down the track.

Does Your Will Cover Superannuation?

You’ve worked hard to build up your super, but did you know that you don’t actually own it? 

Technically, it’s held in trust by your super fund. When you pass away, it’s able to be paid to your Legal Personal Representative (e.g. your executor) and/or your superannuation dependents.

However, unless you make a Binding Death Benefit Nomination (BDBN), the trustee of your super fund decides who receives it—and that might not align with your wishes.

A BDBN lets you choose who will receive your super from a specific group of people defined as superannuation dependents at your time of death. These are:

• Your spouse or de facto partner

• Your children (any age)

• Someone you live with in an interdependent relationship

• Someone wholly or partially financially dependent on you

Another option is to choose for your super to be distributed to your estate (by nominating your executor) so that it can pass in accordance with your directions in your Will. 

Each option has pros and cons when it comes to tax and protection from legal claims, so it’s essential to check the rules of your super fund. 

To ensure that your super is paid to your nominated dependent or your estate, you must complete the correct form with your super company. There are non-binding and lapsing nominations (usually expiring after a three year period), and binding and non-lapsing nominations. For certainty, you’ll want to make a binding nomination.  

However it’s essential to get advice according to your circumstances, taking into consideration tax and asset protection, as this can make a huge difference to your family when the time comes.

The Tax You Don’t See Coming

When people think about Wills, they focus on who will receive their assets. But just as important is how those assets are passed on, and this is where tax implications come in.

There’s no formal inheritance tax in Australia – but that doesn’t mean everything is tax-free. The amount of tax you or your estate or your beneficiaries will pay depends on how your estate is structured.

For example:

• Superannuation death benefits paid to adult children (who are not tax dependents) can be taxed up to 17%. 

• Capital Gains Tax (CGT) might apply if you leave behind an investment property or shares acquired after 20 Sept 1985, which are sold after death.

These taxes can reduce the value of what your loved ones receive. But with careful planning from a specialist estate lawyer, it’s often possible to reduce or defer the tax burden. 

This might involve using a testamentary trust to share income, or structuring your superannuation nominations strategically. For assets that may be subject to CGT, it might also involve choosing the right person at the right time.

If your beneficiaries or executor live overseas, matters can get even more complex. Foreign residents may miss out on Australian tax concessions, and overseas executors could subject your estate to higher tax rates and loss of tax-free thresholds.

Smart planning can reduce or avoid these cross-border problems. A good estate lawyer will:

• Help structure your Will to minimise tax

• Consider the use of a testamentary trust to protect assets and split income

• Access tax advice to ensure that after death, your assets are transferred in a way to reduce tax on capital gains

Final Thoughts

A well-prepared estate plan isn’t just about deciding who gets what – it’s about having the foresight and efficiency to make sure your loved ones get the most benefit, with the least stress.

It’s something every adult should consider – especially if you have children, own property, or have superannuation.

A good estate plan helps:

• Protect your family

• Reduce tax

• Avoid confusion and conflict

• Honour your values

It’s one of the most thoughtful things you can do for the people you love.

Need help getting started? We’re here when you need us.