Superannuation Lawyers Melbourne

Superannuation and Succession: When is it Time to Revisit Your Strategy?

Despite the foreshadowed superannuation tax changes, there are already strong reasons to reassess your superannuation and succession plan — particularly if your retirement savings could one day be passed on to adult children or your estate.

Most Australians don’t realise that superannuation is not always tax-free on their death.

If a superannuation balance is distributed to someone who is not a tax-dependent — such as adult children or your estate — it can attract an “exit tax” of 15% (up to 17% with the Medicare Levy). These tax liabilities often come as a shock to grieving families and can significantly reduce the value of the estate.

By contrast, a spouse is considered tax-dependent and will generally receive your super tax-free. But if your spouse has predeceased you — or if you intend to leave your super to other beneficiaries — your estate could pay thousands of dollars in legally and easily avoidable tax.

Tony Kelly Estate Planning Lawyers Expertise

As experienced estate planning lawyers, our team works with clients across Melbourne and Australia wide to develop personalised strategies that reduce tax exposure and support wealth transfer goals.

We help you:

• Evaluate the impact of superannuation taxes on your estate
• Identify opportunities for tax-efficient asset transfers
• Review and update your Wills, trusts, powers of attorney and superannuation beneficiary nominations
• Collaborate with your accountant or financial planner to align your plan with our advice
• Protect your legacy through smart legal structuring

Whether your estate is simple or complex, we bring over 50 years of legal experience and a results-oriented approach to every matter.

Is Super Part of Your Lifetime Succession Planning?

Succession planning isn’t just about what happens after you die — it’s also about how you manage your assets during your lifetime.

That includes:

• Reviewing how your superannuation is structured.
• Understanding who will receive your super on your death and how it will be taxed.
• Considering whether certain assets (e.g., property or shares) should be transferred out of super and into your name now, rather than after your death. 

  In one recent case, we replaced a missing property title, enabling an asset transfer that saved six figures in stamp duty. Find the full case study here.

• Coordinating your succession plan and your estate plan, including your Will.

In some cases — particularly after a diagnosis of terminal illness — early withdrawal or restructuring of superannuation assets can dramatically reduce tax and preserve your estate’s value for your beneficiaries.

Using Pension Phase to Your Advantage

If you’re over 65 and your super is in pension phase, there are compelling reasons to consider withdrawing your benefit into your personal name during your lifetime. This strategy can offer several tax and estate planning benefits, including:

• Avoiding the super death tax for adult children and non-tax dependent beneficiaries.
• Ensuring that assets pass through your Will, where they can be held for up to 80 years capital gains tax-free.
• Enabling those assets to be allocated into a trust, offering long-term asset protection.
• Helping to minimise stamp duty, especially for real estate transfers.

This approach won’t be appropriate in all circumstances — but for those with appreciating or illiquid assets held in super, it can be an effective way to preserve wealth and control how it’s passed on.

The $3 Million Super Cap: What the Revised Division 296 Tax Means for You

As superannuation laws continue to evolve, staying informed about proposed changes is essential for effective long-term planning. The Australian Government’s revised proposal for the Division 296 tax on superannuation balances exceeding $3 million provides clearer guidance and a valuable opportunity for proactive planning.

Under the latest framework, tiered tax rates will apply: a 30% total tax rate on earnings from balances between $3 million and $10 million, and 40% on earnings above $10 million. In a positive development, the tax will only apply to realised gains such as dividends, interest, and realised capital gains, rather than unrealised gains. The implementation date has been deferred to 1 July 2026, giving individuals additional time to prepare. Furthermore, both the $3 million and $10 million thresholds will be indexed, helping to reduce the impact of bracket creep over time.

It’s important to note that this revised proposal remains under consultation, so continued monitoring and early strategic advice are strongly recommended.  Superannuation should not be treated as a “set and forget” vehicle. Regular review is essential to ensure your structure continues to work in your favour — and in your beneficiaries’ best interest. In line with this, the proposed changes also underscore the importance of considering whether some or all of your superannuation benefits should be brought out of the fund and into your name, particularly if you are over 65 or are facing significant events such as serious illness or the death of a spouse, which can materially affect your estate planning.

Speak with our leading Wills and Estate Lawyers in Melbourne

Your superannuation is a significant part of your wealth — but without the right planning, it can become a tax trap for the next generation.

We are here to help you make informed, proactive decisions that support both your lifetime goals and your legacy.

 Contact us today to speak with Tony or Claire, results driven estate planning lawyers and take the next step in protecting your assets.