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Estate planning gives you a final say
Planning for what happens when you pass away or become incapacitated is an important way of protecting those you care about, saving them from dealing with a financial and administrative mess when they’re grieving.
Your Will gives you a say in how you want your possessions and investments to be distributed. But, importantly, it should also include enduring powers of attorney and guardianship as well as an advance healthcare directive in case you are unable to handle your own affairs towards the end of your life.
At the heart of your estate planning is a valid and up-to-date Will that has been signed by two witnesses. Just one witness may mean your Will is invalid.
You must nominate an executor who carries out your wishes. This can be a family member, a friend, a solicitor or the state trustee or guardian.
Keep in mind that an executor’s role can be a laborious one particularly if the Will is contested, so that might affect who you choose.
Around 50 per cent of Wills are now contested in Australia and some three-quarters of contested Wills result in a settlement.i
The role of the executor also includes locating the Will, organising the funeral, providing death notifications to relevant parties and applying for probate.
Intestate issues
Writing a Will can be a difficult task for many. It is estimated that around 60 per cent of Australians do not have a valid Will.ii
While that’s understandable – it’s very easy to put off thinking about your own demise, and some don’t believe they have enough assets to warrant writing a Will – not having one can very problematic.
If you don’t have a valid Will, then you are deemed to have died intestate, and the proceeds of your life will be distributed according to a statutory order which varies slightly between states.
The standard distribution format for the proceeds of an estate is firstly to the surviving spouse. If, however, you have children from an earlier marriage, then the proceeds may be split with the children.
Is probate necessary?
Assuming there is a valid Will in place, then in certain circumstances probate needs to be granted by the Supreme Court. Probate rules differ from state to state although, generally, if there are assets solely in the name of the deceased that amount to more than $50,000, then probate is often necessary.
Probate is a court order that confirms the Will is valid and that the executors mentioned in the Will have the right to administer the estate.
When it comes to the family home, if it’s owned as ‘joint tenants’ between spouses then on death your share automatically transfers to your surviving spouse. It does not form part of the estate.
However, if the house is only in your name or owned as ‘tenants in common’, then probate will probably need to be granted. This is a process which generally takes about four weeks.
Unless you have specific reasons for choosing tenants in common for ownership, it may be worth investigating a switch to joint tenants to avoid any issues with probate.
You will also definitely need probate if there is a refund on an accommodation bond from an aged care facility.
Super considerations
Another important consideration when dealing with your affairs is what will happen to your superannuation.
It is wise to complete a ‘binding death benefit nomination’ with your super fund to ensure the proceeds of your account, including any life insurance, are distributed to the beneficiaries you choose. You can nominate one or more dependants to receive your super funds or you could choose to pay the funds to your legal representative to be distributed according to your Will.
If a death benefit is paid to a dependant, it can be paid as either a lump sum or income stream. But if it’s paid to someone who is not a dependant, it must be paid as a lump sum.
If your spouse has predeceased you and you have adult children, they will pay up to 32 per cent on the taxable component of your super death benefit unless a ‘testamentary trust’ is established by the will, naming them as beneficiaries.
A testamentary trust is established by a Will and only begins after the person’s death. It’s a way of protecting investments, cash and other valuable assets for beneficiaries.
Rights of beneficiaries
Bear in mind that beneficiaries of Wills have certain rights. These include the right to be informed of the Will when they are a beneficiary. They can also expect to hear about any potential delays.
You are also entitled to contest or challenge the Will and to know if other parties have contested the Will.
If you want to have a final say in how your estate is dealt with, then give us a call.
Unexpected outcomes
David died in his early 60s. He left his estate to his wife Sally in accordance with his Will.
It seemed sensible at the time. But after a few years, Sally remarried. Unfortunately, the marriage did not last. When Sally died some 20 years later, her estate did not just go to her and David’s children but ended up being shared with her estranged second husband.
A testamentary trust, stipulating that the beneficiaries of both David’s and Sally’s estates were to be only blood relatives, may have solved this issue.
i Success rate of contesting a will | Will & Estate Lawyers
ii If you don’t, who will? 12 million Australians have no estate plans | Finder
Steps to help you plan for a super retirement
In 1996, total superannuation assets were $245 billion. By 2007, they had surpassed $1 trillion and had exceeded GDP. Today, Australia’s superannuation system as a collective is nudging a staggering $4 trillion, underscoring the system’s growth and importance.
Whilst our compulsory employer contribution scheme ensures a steady stream of funds into retirement savings, there are some simple steps you can take to help secure your future financial security for a super retirement.
The younger you start, the easier it is. Superannuation is not just for the distant future; it’s vital to ensuring financial security throughout your life.
Making superannuation contributions may have the potential for you to pay less tax and, therefore, have more funds to invest, while growing your super balance faster thanks to the power of compounding.
You need to keep in mind that there are limits to the amount you can contribute, whether concessional (before tax) or non-concessional (after tax) to super each year. Always keep an eye on the contribution caps for both concessional and non-concessional contributions to avoid extra tax. If you’re ever uncertain, it’s wise to seek expert advice before making any super contributions.
Key factors in selecting a superannuation fund
Choosing the right superannuation fund is crucial for securing a comfortable retirement, with three essential factors.
- When choosing a super fund it is always important to consider fees, performance and whether you have any existing insurance in place.
- While past performance is not an indicator of future returns, it can indicate a fund’s investment capabilities and is, therefore an important consideration when choosing a fund.
- It is important to understand how your money is invested and whether your investment mix is appropriate for you as you age.
In addition, you need to know whether you already have existing insurance within your super fund, as you will lose this insurance if you switch to another fund.
Making the most of your investments
It’s important to understand your time horizon when determining your investment strategy.
Often people underestimate their time horizon for investments. If you’re 55 and thinking you will retire at 65, you might think you have a 10-year time horizon. However, depending on your financial situation and health, you might have a longer time horizon. This longer time frame allows for a higher risk tolerance, leading to potentially greater returns.
Investment markets can be complicated. If you’re going to try and manage your super fund yourself via a Self-Managed Super Fund (SMSF), you need to make sure that you’re putting in a lot of time and effort to understand how markets and investments work, and the ins and outs of operating an SMSF. This also includes ensuring you are sufficiently diversified so you are not overexposed to certain asset classes.
Proactive measures for boosting your retirement savings
Proactively contributing to your superannuation can significantly enhance retirement savings. Even small additional contributions can make a big difference over time due to the power of compounding. Super contributions can also offer tax benefits, potentially allowing for more funds to be invested and grow.
Contributing to your spouse’s super may be a beneficial strategy, particularly in a couple where one of them isn’t working, or if one person earns considerably more than the other. The person who contributes may be able to claim a tax offset of up to $540 for the contribution.
It may be useful to assess what level of concessional (before tax) contributions you’ve made. If your super balance is under $500,000 and you haven’t made a tax-deductible contribution, the concessional cap may be a great way to top your super up.
Another potential strategy, depending on your age and eligibility is the downsizer contribution, which allows individuals over 55 to contribute up to $300,000 from the sale of their home.
As you can see there are several strategies you may wish to take advantage of to help grow your superannuation. Give us a call to help get you on track to a super retirement.
How much Super is enough?
When considering how much super you should have, it’s important to understand that the amount you need is deeply intertwined with your unique circumstances. Your age, income, lifestyle expectations, and retirement goals are important in helping determine how much super is sufficient for you. While there are general guidelines available, there’s no one-size-fits-all answer.
How much Superannuation do I need to retire?
Your superannuation is purpose-built to help support you during your retirement, so understanding how much you’ll need is crucial.
Many people limit their retirement plans to what they think they can afford instead of starting with what they truly desire. So, to accurately answer how much super I should have, use this information as a general guide and take the time to assess your personal needs and circumstances.
How much super you’ll need in retirement depends on the lifestyle you want. According to the government’s MoneySmart website, if you own your home, the rule of thumb is that you’ll need two-thirds (67%) of your current income each year to maintain the same standard of living.
You can also use the Retirement Standard from the Association of Superannuation Funds of Australia (ASFA), which estimates how much the average Australian would need to retire. This standard assumes that you retire at age 67, own your home (no mortgage), and are relatively healthy.
Super Balance by Age
Understanding average super by age can give you a decent indication of how much you should have saved at different stages of your life.
The latest data from ASFA helps us see where the average Australian super balance is at different stages of life. How does your current balance compare?
| Age | Average balance (Men) | Average balance (Women) |
| Under 18 | $11,710 | $7,455 |
| 18-24 | $8,148 | $7,328 |
| 25-29 | $25,981 | $23,429 |
| 30-34 | $56,344 | $46,289 |
| 35-39 | $95,937 | $75,785 |
| 40-44 | $139,431 | $107,538 |
| 45-49 | $190,716 | $142,037 |
| 50-54 | $246,955 | $182,167 |
| 55-59 | $316,457 | $236,530 |
| 60-64 | $402,838 | $318,203 |
| 65-69 | $453,075 | $403,038 |
| 70-74 | $509,059 | $451,523 |
| 75 and over | $507,556 | $436,865 |
Source: The Association of Superannuation Funds of Australia, June 2021
Is your balance on track?
According to the Super Guru’s Super Balance Detective, here’s what super balance you should be aiming for based on your age. This is the approximate amount of super a person should have now to reach a ‘comfortable’ retirement by age 67, according to the Association of Super Funds of Australia (ASFA).
| 25 years | $18,500 |
| 30 years | $59,000 |
| 35 years | $101,500 |
| 40 years | $156,000 |
| 45 years | $213,000 |
| 50 years | $281,000 |
| 55 years | $361,000 |
| 60 years | $453,000 |
| 65 years | $549,000 |
Source: Super Guru’s Super Balance Detective[1], (May 2024).
What if you’re affected by the gender super gap?
On average, superannuation for women starts with a balance 50% lower than men’s, and women retire with 23% less (ATO, 2022) but live 4-5 years longer in retirement (ABS, 2021). This gender super gap can be because of many reasons, such as being paid less, part-time employment, or having to take time out from the workforce as a parent or carer without receiving spouse contributions[2]. But some strategies can help you close the super gap.
What if your balance is lower?
Don’t feel bad if your balance is lower than you would like. You can usually do something to improve your finances, such as adding extra money to your super or receiving the government’s co-contribution. You may also be able to supplement your super with the Age Pension (if eligible).
What if your balance is on track?
Congratulations on having a solid super balance already. Of course, how much you should have depends on your personal goals, so you might be able to add a little extra, keeping in mind your yearly limit for super contributions.
It’s all about finding the right balance that fits your financial position and retirement goals. We have helped many individuals like you determine how much super they would need based on their goals and situations.
Working with a financial adviser can help you to get more from your super and investments, so you can feel confident you’re on track to live the lifestyle you want in retirement.
[1] https://www.superguru.com.au/calculators/super-detective
[2] https://www.australianretirementtrust.com.au/lp/how-much-super
A new movement for a better lifestyle
Do you have a twelve-a-day habit? We’re talking seated hours, not cigarettes. Studies indicate that sitting too much and moving too little can be just as bad for your health.
The Victorian Government’s Better Health website suggests that sitting is the new smoking, and plenty of studies are backing up the claim. According to government stats, more than 60% of us do less than the recommended 30 minutes of daily exercise[1].
But it’s not just structured exercise that we lack.
Not so long ago, office workers communicated by walking to colleagues’ desks. Information was shared by hand-delivered memos (remember those?), and we physically attended meetings.
We went outside to buy lunch and – horrors – may have even eaten it outside!
Today’s world is one of remote connectivity. People work from home, use email or instant messaging to communicate with colleagues, and attend meetings via videoconferencing.
As a population, we are moving less. We’re buying online where we used to visit shopping centres. We, who once walked or cycled to school, now drive our kids; and they spend hours texting friends online instead of physically meeting up with them.
Technology has aided and abetted us in becoming more sedentary than ever before – to the detriment of our health and wellbeing.
According to the United Kingdom’s National Health Service (NHS), excessive sitting is putting us at risk of all manner of diseases, the most common being obesity and Diabetes Type 2[2].
The NHS quotes sources from Melbourne’s Baker IDI Heart and Diabetes Institute as claiming that too much sitting slows metabolism. This, in turn, affects the body’s ability to regulate blood sugar, blood pressure and metabolise fat.
Other consequences may include conditions like varicose veins, sciatica, deep vein thrombosis (DVT) or more sinister ailments like heart disease and cancer.
So, if too much sitting is the problem, is standing the solution?
Well, yes and no.
Adjustable workstations enabling office workers to stand at their desks are a step in the right direction, but standing alone is not a panacea. Standing for hours can affect posture and lead to neck, back and hip problems.
Movement is the key. Fitting more movement into daily life isn’t as difficult as you might think.
Consider:
- Taking the stairs instead of the lift.
- Visiting colleagues’ desks.
- Pacing while on the phone.
- Setting an hourly timer reminding you to get up and walk.
- Walking with the kids to school.
- Organising walking meetings– it’s a thing, Google it!
Our bodies are designed for movement. Lack of movement weakens muscles and bones, and ultimately our health and mental well-being can suffer.
It’s like leaving a car idle in a garage for months. You can replace a car, but you can’t replace your body – technology hasn’t gone that far yet – so get up and move it!
[1] betterhealth.vic.gov.au/health/healthyliving/the-dangers-of-sitting
[2] nhs.uk/live-well/exercise/why-sitting-too-much-is-bad-for-us