We often spend our lives building wealth, nurturing families, and planning for upcoming holidays or retirement. Yet, one of the most critical aspects of our financial life is often pushed to the bottom of the to-do list: estate planning.
While estate planning can seem overwhelming and possibly reserved for the very wealthy or elderly, having a clear plan is essential for any adult in New South Wales who wants to ensure their wishes are honoured.
This article provides general information about estate planning in New South Wales. It is not legal, tax, or financial advice, and you should obtain independent advice tailored to your circumstances.
What Is Estate Planning?
Estate planning is the process of arranging the management and disposal of your estate during your life and after death.
Your “estate” includes everything you own personally: your home, car, bank accounts, investments, and personal possessions. However, a strategic plan is about more than just money and objects. It is about people.
Estate planning considers:
- Guardianship: Determining who will look after your children if you pass away while they are still minors.
- Incapacity: Deciding who can make medical or financial decisions for you if you become unable to do so yourself. In NSW, this usually involves appointing an Enduring Power of Attorney to manage financial and certain legal decisions and an Enduring Guardian to make health and lifestyle decisions if you lose capacity.
- Legacy: A roadmap you leave behind to guide your loved ones during a difficult time.
What Happens if You Die Without a Will?
If you die without a valid Will, you are said to have died “intestate”. In this scenario, your estate is distributed according to a legislative formula in the Succession Act 2006 (NSW), regardless of any informal wishes you may have expressed.
The following scenarios are simplified summaries of those rules. The actual outcome can be more complex and depends on your circumstances.
Scenario A: Spouse and shared children
If you leave a spouse and children who are also the children of that spouse, the spouse usually receives the entire estate. Your children do not receive a separate fixed share on intestacy.
Scenario B: Spouse and children who are not your spouse’s children
If you leave a spouse and children who are not the spouse’s children, your spouse receives a “statutory legacy” (a lump sum that is indexed and changes over time) plus half of the remainder of the estate. Your children from the prior relationship share the other half.
Scenario C: No spouse or children
The estate passes to parents, then siblings, then more distant relatives in a set order.
This is a general overview only, and the circumstances of each case must be considered in their entirety. The formula becomes more complex, for example, in cases involving blended families and multiple relationships, with the legislation providing for a range of scenarios.
Comprehensive Estate Plans – Why You Need a Strategic Estate Planning Process
Many people believe that drafting a simple Will is enough. While a Will is essential to estate planning, it is often just one piece of the puzzle. A strategic estate planning process looks at the bigger picture.
Life is complicated. You might have a blended family, a family business, or assets held in family trusts or superannuation funds. A standalone Will might not cover these assets effectively because they are not automatically part of your “estate”.
For example:
- Superannuation: This is held in a trust. You need a binding death benefit nomination naming your chosen beneficiary otherwise, the trustee decides. Whether a binding nomination is available and how it operates depends on your fund’s trust deed and the relevant legislation.
- Jointly held property: If you own a home as “joint tenants”, it automatically passes to the surviving joint tenant, bypassing your Will entirely.
- Business interests: A Will is essential to distribute personal assets amongst your beneficiaries; however, it is typically insufficient for dealing with trading entities such as companies or trusts. This is where business succession planning forms an integral part of your estate planning.
Comprehensive estate plans also typically involve appointing attorneys and guardians to manage certain financial, health and medical matters (as relevant) if you are incapacitated. Without these legal documents, a court or tribunal may need to appoint someone which might not be the person you would have chosen.
Addressing these issues requires a comprehensive plan to help protect your hard-earned assets, provide certainty for your family, and reduce the risk of conflict amongst those you love. While it is true that some family members may still be able to claim further provision from your estate, clear and considered planning can reduce the likelihood and impact of disputes.
Essential Estate Planning FAQs
Below, we answer the most frequently asked questions to help you navigate your estate planning journey.
Who Should I Choose as My Executor, Attorney, or Guardian?
Choosing these representatives is one of the biggest decisions you will make.
- Executor (after death): Collects assets, pays debts, and distributes the estate.
- Attorney (during life – financial): Manages bank accounts, pays bills, and sells property if necessary.
- Enduring Guardian (during life – medical): Makes health and lifestyle choices.
Trust is the most important factor. These people should be organised, honest, and reliable. If your estate is complex or you foresee family conflict, you might consider appointing an independent professional trustee to ensure neutrality.
How Could Estate Planning Help Minimise Taxes for My Beneficiaries?
While Australia does not have a specific “death tax”, there are still significant tax implications to consider.
- Superannuation tax: If you leave superannuation to a person who is not a “tax‑dependent” (for example, an independent adult child), tax may be payable on the taxable component at around 15% plus Medicare levy, depending on the type of benefit and the law at the time. Appropriate planning and advice can help minimise unnecessary tax.
- Testamentary trusts: Instead of assets going directly to a beneficiary, they can go into a trust created by your Will. This can offer significant flexibility in how assets are distributed and, in some cases, optimal tax planning. Whether a trust is beneficial in your circumstances requires personalised taxation/financial advice.
When Is the Best Time to Start the Estate Planning Process?
If you are over 18 years, it is generally sensible to put in place a Will and consider whether an enduring power of attorney and/or guardianship documents are suitable.
You should certainly start or update your planning if you hit any major life milestones:
- Buying a home: You now have a significant asset to protect.
- Getting married or entering a de facto relationship: Marriage often revokes a previous Will, so you may need a new one.
- Having children: You may wish to nominate guardians.
- Separation or divorce: You must update your documents immediately to ensure an ex-partner does not inherit or retain control over your decisions.
- Starting a business: You need to plan for business succession.
Waiting until a crisis hits is often too late. If you lose mental capacity due to an accident or illness, you can no longer sign legal documents. Having your plan in place early gives you peace of mind that you are prepared for the unexpected.
How Often Should I Review or Update My Estate Planning Documents?
Your life is not static, and your legal documents shouldn’t be either. A good rule of thumb is to review your documents every three to five years, or sooner if there is a major change in your personal, financial, or family circumstances, or in the law.
Even if your personal circumstances haven’t changed, the law might have. Tax rules regarding superannuation and trusts change periodically. An old strategy might no longer be the most efficient one.
You should immediately review your plans and consider any necessary updates if:
- An executor or beneficiary dies.
- You have more children or grandchildren.
- Your financial situation changes significantly (e.g., you receive a large inheritance or sell a business).
- Relationships within your family change (marriages, divorces, or estrangements).
Regular reviews ensure your plan always reflects your current wishes and financial reality.
Peace of Mind Starts Here
Estate planning provides a safety net for you and your family. It ensures your hard-earned assets go where you want them to go, and removes the burden of guesswork from your grieving loved ones.
By seeking tailored advice from a solicitor experienced in NSW estate planning, and where appropriate, a tax adviser, you can build a secure future for yourself and the generations to follow.
Disclaimer: This article is general information only and does not constitute legal, tax, or financial advice. You should obtain independent advice based on your personal circumstances before making any decisions about your estate plan.
If you are ready to get your affairs in order, we can help. Contact Revolance Legal via phone 02 9266 0688 or email [email protected] to get in touch with our team.