Life Stage

Why self-funded retirees need a will

Complex assets, SMSFs, and tax planning make estate planning essential for self-funded retirees.

⚡ The Short Answer
Self-funded retirees often have complex estates — SMSFs, investment portfolios, multiple properties. Without careful planning, your beneficiaries could face unnecessary tax bills and administrative nightmares.

More assets, more complexity

Self-funded retirees typically have accumulated significant and diverse assets:

  • Self-managed super funds (SMSFs)
  • Investment properties
  • Share portfolios
  • Managed funds
  • Term deposits and cash
  • Personal assets of value
  • Family trusts or companies

Each of these has different rules about how it passes on death and how it’s taxed.

SMSFs need special attention

If you have a self-managed super fund, standard will planning isn’t enough.

Your SMSF has its own governing rules:

  • The trust deed controls what happens to member benefits
  • Binding death benefit nominations must comply with the deed and super law
  • Trustee succession must be planned
  • If you’re the sole member and trustee, who takes control when you die?

⚠️ Critical: Your will doesn't automatically control your SMSF. You need valid death benefit nominations AND proper trustee succession planning. Get this wrong and your fund could be forced into wind-up, triggering tax consequences.

Tax efficiency matters

Self-funded retirees need to consider the tax implications of their estate:

Capital Gains Tax (CGT):

  • Many assets have unrealised capital gains
  • Some assets get a “death uplift” (cost base reset)
  • Others don’t, leaving beneficiaries with CGT liability
  • Planning can minimise the overall tax burden

Super death benefits tax:

  • Tax-free to dependants (spouse, children under 18)
  • Up to 32% tax for adult children on taxable components
  • Structuring matters significantly

Other considerations:

  • Transfer duty on property (depending on structure and beneficiary)
  • CGT on sale vs transfer of assets
  • Income tax on trust distributions

Investment properties and CGT

If you own investment properties:

  • They don’t get the CGT-free death uplift
  • Your beneficiaries inherit your cost base
  • If they sell, they pay CGT on all gains since you bought
  • Timing of sale matters for managing tax

Consider:

  • Whether to sell and distribute cash instead
  • Transferring to a testamentary trust for income splitting
  • Which properties go to which beneficiaries based on their tax position

Family trusts and structures

If you’ve used family trusts, companies, or other structures during your wealth-building years:

  • What happens to your role as appointor/guardian?
  • Who becomes director of companies?
  • How do trust assets flow to beneficiaries?
  • Are there loan accounts that need addressing?

These don’t pass through your will automatically — they need separate succession planning.

Aged care considerations

Self-funded retirees may eventually need aged care. Your estate plan should consider:

  • How aged care costs affect your estate
  • Whether assets should be restructured before needing care
  • Granny flat arrangements and their impact
  • Centrelink and means testing implications

Testamentary trusts for asset protection and tax

A testamentary trust (created by your will) offers benefits:

Tax advantages:

  • Income can be distributed to beneficiaries in lower tax brackets
  • Children under 18 can receive distributions taxed at adult rates
  • Potentially significant ongoing tax savings

Asset protection:

  • Protects inheritances from beneficiaries’ creditors
  • Can protect against divorce settlements
  • Keeps assets controlled for vulnerable beneficiaries

For significant estates, testamentary trusts are almost always worth considering.

Choosing the right executor

Your estate may require an executor with:

  • Financial sophistication
  • Understanding of tax
  • Ability to manage investments during administration
  • Time and patience for complexity

Consider a professional executor (trustee company) or a co-executor arrangement combining family with professional expertise.

Review and update regularly

Self-funded retiree estates change frequently:

  • Investment performance varies
  • Super rules change
  • Tax law evolves
  • Your wishes may shift

Review your estate plan annually or whenever there’s a significant change.

What to do now

  1. Review your SMSF deed and death benefit nominations
  2. Understand the tax position of each major asset
  3. Consider testamentary trusts for tax and asset protection
  4. Plan trustee and appointor succession for any trusts
  5. Coordinate your will with super, trusts, and company structures
  6. Consider professional executor assistance
  7. Get comprehensive advice — the stakes are high

💡 Investment in advice: Professional estate planning for a complex self-funded retiree estate costs money. But it can save tens or hundreds of thousands in tax and prevent family disputes. It's one of the best investments you'll make.

Related: What Your Will Doesn’t Cover · Understanding Probate