Estate planning: wills, powers of attorney and super

Estate planning is about deciding what happens to your money, property and care if you die or can’t make decisions for yourself. It’s not just for the wealthy. A few simple documents can save your family a lot of stress and cost.

Why a will matters

A will is a legal document that says who gets your belongings and money when you die. It also names an executor: the person who carries out your wishes.

If you die without a valid will, state or territory law decides who gets what. That may not match what you’d want, especially if you have a blended family, a de facto partner or someone who depends on you.

A will can also:

• Name a guardian for children under 18.
• Leave gifts to friends or charities.
• Set up a trust for someone who can’t manage money on their own.

You can make a will through a lawyer, your state’s Public Trustee (some charge low or no fees, depending on your situation), or a will kit. Kits are cheap, but mistakes can make a will invalid.

Super isn’t automatically part of your will

This surprises many people. Your super is held in trust by your fund, so it doesn’t automatically follow your will. The trustee decides who gets it, unless you’ve told them in a way they must follow.

Super can usually only be paid to:

• Your dependants, such as your spouse or partner, children of any age, or someone who relied on you financially or lived with you in an interdependent relationship.
• Your legal personal representative, which means your estate, to be shared under your will.

Death benefit nominations

You can tell your fund who should receive your super. There are a few types:

A binding nomination usually needs to be signed in front of two adult witnesses who aren’t named in it.

Check your nomination in your fund’s online account or annual statement.

Tax on super death benefits

Death benefits paid to a tax dependant, such as a spouse or a child under 18, are generally tax-free.

Adult children who weren’t financially dependent may pay tax on part of the benefit. The amount depends on the “taxable component” of the super. This is worth knowing if you plan to leave super to grown-up children.

Powers of attorney and guardianship

A power of attorney lets someone you trust make decisions for you.

• A general power of attorney covers financial decisions for a limited time, such as while you’re overseas. It stops if you lose capacity (the ability to make your own decisions).
• An enduring power of attorney keeps working if you lose capacity, such as through dementia or a stroke.
• An enduring guardian (the name varies by state) can make health and lifestyle decisions, such as where you live and what medical treatment you get.
• An advance care directive records your wishes about future medical care.

Each state and territory has its own forms and rules. Your state’s Public Trustee or Office of the Public Advocate has free information.

Keep it up to date

Review your will, nominations and powers of attorney every few years, and after:

• Marriage, separation or divorce.
• A birth, adoption or death in the family.
• Buying or selling property.
• Starting a retirement pension.

Where to get free help

• Your state or territory Public Trustee: information on wills and powers of attorney.
• Legal Aid in your state: free legal information.
• Your super fund: for nomination forms.
• Elder abuse help line: 1800 ELDERHelp (1800 353 374).
• Moneysmart: https://moneysmart.gov.au/plan-for-your-retirement/wills-and-powers-of-attorney