In our line of work conversations with clients around estate planning can arise, and one thing that often catches people off guard is this: Australia doesn’t have a death tax… but that doesn’t mean everything passes on tax free.
A lot of people feel like once they have a will in place, everything’s sorted. And legally, that might be true. But from a tax and structuring point of view, there’s often a bit more to think about.
We regularly see situations where someone has done everything right, but the way their assets are set up means their family ends up with a different outcome than they expected.
Where things can get tricky
A common example is how people split assets between their spouse and their children. Ben worked with a client where the will outlined to leave the family home to a spouse and superannuation (super) to the children. On paper, that can look like a fair split. But the tax treatment isn’t the same.
If your super is left to your adult children, there can be tax to pay when they receive it. If it goes to your spouse, it’s generally tax-free. So even if the values are similar, what each person actually ends up with can be quite different.
That’s usually not intentional – it’s just something that hasn’t been talked through.
A more flexible way to approach your estate and tax
Super doesn’t always flow through your estate in the same way as other assets.
It can be paid directly to someone through your super fund, or it can be directed back to your estate and then distributed under your will. Each option can lead to a different outcome.
This is where structure starts to matter.
One thing we often discuss with clients is whether a testamentary trust makes sense as part of their will.
It’s essentially a structure that sits inside the will and gives your family more flexibility after you’re gone. It can help from a tax point of view, particularly when income is being distributed, and it also allows assets to be managed over time rather than paid out all at once.
For some families, that flexibility makes a real difference.
The part most people miss – the structure
Writing a will is an important step, but it’s really just one piece of the puzzle.
The structure behind it – how assets are owned, how super is set up, how everything flows – is what ultimately determines the outcome.
We often see wills that are perfectly valid, but haven’t been looked at from a broader tax and planning perspective. That’s where having your accountant and lawyer working together can make things a lot clearer.
If you’re not sure how yours is set up
This isn’t something most people think about day to day, so you’re not alone if you haven’t looked at it this way before.
If it’s something you’d like a pulse check on, we’re always happy to talk it through and make sure everything is aligned with what you’re trying to achieve.
You can catch us at our Epsom or Castlemaine office, give us a call or chat over a video meeting.