More than half of Australian adults don’t have a current, valid will. Of those who do, far fewer have the other documents that make up a complete estate plan: an enduring power of attorney, an advance care directive, and — critically — a valid superannuation binding death benefit nomination.
Without these, the assets and wishes you’ve spent a lifetime building are left to chance, legal default, and the discretion of people you may not have chosen.
The will: essential, but not the whole picture
A will governs what happens to your estate — the assets you personally own — after you die. It names your executor (who administers the estate) and your beneficiaries (who receive assets under it).
Without a valid will, you die intestate, and your assets are distributed according to a statutory formula. That formula doesn’t account for blended families, estranged relatives, or your actual intentions. It can also mean lengthy and expensive court proceedings before anything is distributed.
A will must be properly witnessed and signed to be valid. Handwritten wills are valid in most states but create risk. Online will services vary significantly in quality. For anything other than a straightforward situation — which most families aren’t — professional legal drafting is worth the cost.
Key point: Your will only covers assets you personally own. It does not cover super, life insurance proceeds, jointly held assets (which pass by survivorship), or assets held in trusts. This is where many people are caught out.
The binding death benefit nomination: super is separate
Your superannuation is held in trust. It does not automatically form part of your estate. Your super fund trustee has discretion over who receives your death benefit — unless you have a binding death benefit nomination (BDBN) in place.
A BDBN directs the trustee to pay your benefit to specific people (your spouse, children, or estate). Without one, the trustee will consider your circumstances and make a determination — which may not align with your wishes.
BDBNs have an expiry date (usually three years) unless your fund offers a non-lapsing nomination. They must be renewed. Thousands of Australians have lapsed BDBNs without knowing it.
If your life circumstances have changed — a new relationship, divorce, birth of children, death of a nominated beneficiary — your nomination must be updated.
The enduring power of attorney: if you can’t make decisions
An enduring power of attorney (EPOA) is a legal document that authorises a trusted person to make financial and legal decisions on your behalf if you lose capacity.
Without an EPOA, if you suffer a stroke, a serious accident or develop dementia, nobody has automatic legal authority to access your bank accounts, pay your bills, or manage your investments. Your family must apply to the state tribunal to obtain a guardianship order — a slow, costly, and sometimes distressing process.
An EPOA should be a person you trust implicitly and who is capable of handling financial decisions. It should be someone who will act in your best interests, not their own.
The advance care directive: medical decisions
An advance care directive (also called a living will or advance health directive, depending on the state) records your wishes regarding medical treatment if you cannot communicate them yourself.
It gives clarity to your treating doctors and your family about the level of intervention you want — or don’t want — in the event of a serious accident or terminal illness. Without one, your medical team and your family are left to make extraordinarily difficult decisions without guidance.
Testamentary trusts: protecting your beneficiaries
For estates of meaningful size, a testamentary trust — a trust that is established by the will and takes effect on death — can provide significant benefits.
Testamentary trusts allow income to be distributed to minors at adult marginal rates (rather than the 47% penalty rate that normally applies to minors), protect assets from beneficiaries’ creditors, and provide protection against relationship breakdown for adult beneficiaries.
They add complexity and cost to estate administration, but for many families the tax and asset protection benefits are substantial.
When did you last review yours?
Estate planning documents have a habit of becoming stale. Life events — marriage, divorce, new children, deaths in the family, significant changes in wealth — can all make your existing documents inadequate or actively counterproductive.
An annual check of your documents as part of your financial planning review is the single most impactful step most people can take to protect their families.