The New Death Tax

How much of your super goes to the tax man when you die? Often when a person dies a large proportion of their super is liable for taxation, resulting in up to 30% of their super capital value being lost in tax.

Estate Planning and Superannuation in your SMSF

Commonly, when people think of Estate Planning, the first thing that comes to their mind is that they need to update their Will.

What few people realize is that this is only part of the planning that should be undertaken when you review your Estate Plan, especially when you have your own self managed superannuation fund.

So, if I have a self managed superannuation fund, what do I need to consider when I review my estate planning matters?

Broadly, you need to consider the following:

1. Your Will

Your Will is still an important document in your Estate Planning, but your Will cannot be drafted in isolation of all other documents.

You need to sit down with a professional who has experience in both self managed superannuation funds, as well as Estate Planning to ensure that all of your documents complement each other, to avoid nasty surprises later, and complications for your loved ones when you pass away.

There may also be instances where your wishes are not effected due to poor drafting of all documents and not connecting them all to the same wishes.

Your Will also needs to address issues such as:

  • Superannuation Death Benefit Eligible Termination Payments (ETP's), is there to be trustee discretion about these or should a nomination be binding?
  • Should the executor be nominated or a family member benficiary?
  • What are the tax consequences of this ararangement - NIL tax, 15% TAX OR 30% TAX?
  • Should a reversionary pension be provided for?
  • Who, in circumstances where at least one (or possibly both) SMSF account holder(s) is deceased wil be the trustee of the SMSF handling these matters?
  • Is the trustee potentially holding superannuation funds for the benefit of minor beneficiaries or trustees of the SMSF?
  • What does the Will say about Super - if anything?
  • Is a testamentary Trsut appropriate or beneficial (Are the potential tax benefits useful?),
  • And so on....

2. Your Enduring Power of Attorney. 

It is a little known fact to many people (including some professionals) that your Enduring Power of Attorney is a vital document for your SMSF.

The legislation relating to SMSF’s is very particular, and requires every member with a balance to also be a trustee or director of a trustee. Complications quickly arise when one of the trustees or directors may become incapacitated, for example in a coma from a car accident or they may suffer from dementia. In these circumstances, unless the appropriate documents are completed in the appropriate manner, your SMSF may become non – compliant, which may cause significant tax implications for you.

3. Your Superannuation Fund Trust Deed

Your SMSF trust deed is also very important to your estate planning. This is the deed which governs the manner in which your fund is operated.

If your deed is not up to date, it may significantly hamper the manner in which your fund can be administered after your death, causing complications for your loved ones, and possibly unintended tax consequences for your beneficiaries.

4. Control of your Superannuation fund in the event you pass away 

You need to also consider who the remaining trustees will be in your superannuation fund and, in the instance that you are the sole remaining member, you also need to consider who you appoint as your Executor as they may also control your superannuation fund on your passing.

These issues need to be considered jointly with your Will to ensure that there is no confusion or difficulty in administration after your passing.

5. Binding Death Benefit Nominations

This is a binding direction to the trustees of the superannuation fund as to who you want to receive your balance and any other balance funds upon your death.

This is binding, in that the trustee cannot make another decision to give the balance to another person (with some minor exceptions).

You therefore need to ensure that this document is completed when you undertake your Estate Planning to ensure that your funds flow as you desire. You should also note that this nomination must be updated at least every three years.

6. Payments to adult children

If you decide that your superannuation benefit is to be paid to an adult child upon your death, this may not necessarily be passed to them on a tax free basis.

Therefore, it is important to ensure that any election to pay your superannuation benefits is considered by an informed professional, who can ensure that the appropriate measures are in place in order to properly deal with any issues, where possible.


Estate planning is a complex process, and involves the consideration of many items and structures in order to ensure that your Estate is adequately protected and your wishes effected in the most expedient and simplest manner possible.

Ascendia Lawyers has experience in all of the above areas and our Legal Practitioner Director, Natalie Carpenter, would be more than happy to meet with you to discuss your Estate Planning matters and to ensure that both you and your family are adequately covered with the appropriate documents for your circumstance.

For assistance, please contact us at our office

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