Estate Planning with a Financial Adviser — Protecting Your Legacy

Estate planning is the process of arranging your financial affairs so that your assets are distributed according to your wishes when you die or become incapacitated. It involves:

• A valid will — the legal document that directs how your assets are distributed
• Superannuation nominations — directing where your super goes (super is not automatically covered by your will)
• Powers of attorney — appointing someone to make financial and legal decisions if you cannot
• Advance care directives — documenting your wishes for medical treatment
• Trust structures — if appropriate, for asset protection or tax planning
• Insurance — ensuring your family is financially protected if you die or become disabled

Estate planning is not just about death — it is about ensuring your affairs are in order for any scenario where you cannot manage them yourself.

One of the most common estate planning mistakes is assuming your will covers your superannuation. It usually does not.

Super is held in trust by your super fund (or SMSF) and is paid to your dependants or legal personal representative according to the fund's trust deed and your nomination.

Types of nominations:

• Binding death benefit nomination (BDBN): Legally binding — the trustee must pay your super to the people you nominate. In most funds, BDBNs expire every 3 years and must be renewed. In SMSFs, non-lapsing BDBNs are possible.
• Non-binding nomination: The trustee considers your wishes but has discretion over who receives your super.
• Reversionary pension nomination: If you are already receiving a pension from super, you can nominate a beneficiary to continue receiving it after your death.

Who can receive your super: Your super can only be paid to your dependants (spouse, children, anyone financially dependent on you) or your legal personal representative (your estate). If you want it to go to someone else, it must flow through your estate via your will.

Tax implications: Super death benefits paid to tax dependants (spouse, children under 18) are generally tax-free. Payments to non-tax-dependants (e.g., adult children) may be taxed. A financial adviser can help structure your nominations to minimise tax.

A financial adviser adds value to estate planning by:

Coordinating with your solicitor: Your solicitor drafts the legal documents (will, powers of attorney). Your financial adviser ensures the financial strategy behind those documents is sound — asset structures, super nominations, insurance, and tax implications all align with your wishes.

Super and pension planning: Advising on the most tax-effective way to pass super to your beneficiaries, whether through BDBNs, reversionary pensions, or via your estate.

Insurance review: Ensuring you have adequate life insurance, TPD, and income protection to support your family if something happens to you. This includes insurance within super and outside super.

Trust and structure advice: If you have business interests, investment properties, or complex family arrangements, a financial adviser can help assess whether trust structures are appropriate (working with your solicitor and accountant).

Centrelink and pension implications: How asset structures and inheritances affect Age Pension entitlements for you or your beneficiaries.

Regular reviews: Estate plans should be reviewed after major life events — marriage, separation, birth of children, purchase or sale of major assets, and changes in legislation.

These documents are essential components of estate planning:

Enduring power of attorney (financial): Appoints someone you trust to make financial decisions on your behalf if you lose capacity. This includes paying bills, managing investments, selling property, and dealing with government agencies. Without this, your family may need to apply to a tribunal for a guardianship order — a costly and stressful process.

Enduring power of attorney (medical / guardianship): Appoints someone to make lifestyle and medical decisions for you if you cannot. The terminology varies by state (e.g., "enduring guardian" in NSW, "medical treatment decision maker" in Victoria).

Advance care directive: Documents your wishes for medical treatment in specific scenarios. This guides your medical decision-maker and treating doctors.

• Important notes:**
• Powers of attorney must be set up while you have legal capacity — you cannot create them after losing capacity
• Each state has different requirements and forms
• Review your appointments regularly — relationships and circumstances change
• Keep originals safe and ensure your appointed people know where they are

Avoid these common pitfalls:

• No will at all — dying intestate means your assets are distributed according to state law, which may not match your wishes
• Outdated will — a will made before marriage may be automatically revoked in some states
• Forgetting super — without a binding nomination, your super trustee decides where it goes
• No power of attorney — leaving your family unable to manage your affairs if you lose capacity
• Not considering blended families — second marriages and step-children create complex distribution issues
• Assuming everything goes to your spouse — this is not always the case, especially for super and jointly-held assets
• Ignoring tax — poor structuring can result in unnecessary tax on super death benefits or capital gains
• Set and forget — estate plans need updating after major life events and legislative changes

Review your estate plan when:

• You get married or enter a de facto relationship — this may revoke your existing will
• You separate or divorce — update beneficiaries, powers of attorney, and super nominations
• You have children — appoint guardians, update your will, review insurance
• You buy or sell a major asset — property, business, or significant investments
• You receive an inheritance — reassess your overall position
• Legislation changes — super and tax law changes can affect your plan
• A nominated person dies or becomes unsuitable — update beneficiaries and attorneys
• Every 3-5 years as a general review

A financial adviser who knows your full financial picture is well-placed to prompt these reviews and coordinate with your legal team.