Financial advisers often control the largest assets that a will never touches: superannuation, insurance inside and outside super, and investment platforms. A client may have a perfect will and still leave a disaster, because the super nomination lapsed, the insurance went to the wrong person, or the platform was owned by the wrong entity.
Gaps we see
- Lapsed or invalid nominations. Many binding death benefit nominations lapse after three years. Others name people who cannot legally receive super, such as a sibling.
- Nominations that contradict the will. Super goes directly to a second spouse while the will tries to balance two families.
- Insurance bigger than the estate. The life cover inside super is larger than everything else combined, and nobody planned where it would go.
- Tax on death benefits. Benefits paid to adult children who are not financially dependent are often taxed. Paying through the estate, or using other strategies, can change the outcome, and the right choice depends on the whole family picture.
- Overseas beneficiaries. Payments to beneficiaries living in Singapore, Hong Kong or China raise identity, bank and tax issues, sometimes in more than one country.
How we work with advisers
- Your client, your advice. We do not give financial product advice. We make sure the legal documents carry out the strategy you and the client agree.
- Aligned documents. Will, testamentary trusts, powers of attorney and super nominations reviewed together, so each does its job.
- When a client dies, we act for the executor or family on the estate side, and help the family through the super fund’s claim process, while you look after the investments.
- Language and culture. We can explain the plan in Mandarin or Cantonese to elderly clients and their families, which reduces the risk of misunderstanding later.
A simple test
Ask your clients: “If you died tonight, who would get your super and insurance, and is that what you want?” If they do not know, or the answer surprises them, the estate plan needs work.
Frequently asked questions
Does superannuation form part of my estate?
Not automatically. Superannuation is held by the fund trustee and is paid according to a valid death benefit nomination or the trustee’s discretion, not under your will, unless it is paid to your estate. That is why a will and super nominations need to be reviewed together, so that they work together rather than contradict each other.
How long does a binding death benefit nomination last?
Many binding death benefit nominations lapse after three years unless they are renewed, although the rules depend on the fund. A nomination can also be invalid if it names someone who cannot legally receive super, such as a sibling. Advisers should check their clients’ nominations regularly and after major family changes.
Is a super death benefit paid to adult children taxed?
Often yes. Death benefits paid to adult children who are not financially dependent on the deceased are often taxed. Paying the benefit through the estate, or using other strategies, can change the outcome, but the right choice depends on the whole family picture and should be worked out by the client’s adviser and lawyer together.
What should financial advisers ask clients about estate planning?
A simple test is to ask: “If you died tonight, who would get your super and insurance, and is that what you want?” If the client does not know, or the answer surprises them, the will, testamentary trusts, powers of attorney and super nominations should be reviewed together so each document does its job.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice. Victorian law unless stated otherwise.
Tell us about the estate
A short message is enough. We reply in English, Mandarin or Cantonese, and quote fees in writing before any work starts.
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