Death and taxes… the certainty just got even more real

One of the sleeper impacts of changes to the superannuation system is the affect on estate plans.

Before the changes – ordinarily if dad died, he reverted his pension to mum and she would continue to draw a pension and vice versa if mum died first – ie all of their superannuation could stay inside super.

But, the changes to superannuation mean you can now only have a pension balance of $1.6M – per person, meaning if dad dies and leaves his pension to mum, if that’s in excess of $1.6m – that excess will need to be paid out as a lump sum – in addition to mum rolling her pension balance back to accumulation!

The need to pay out any excess poses a number of questions:

  • Is paying it to mum directly sensible,  or should it be directed to a testamentary trust?
  • Does the fund have the liquidity to pay out the excess eg what happens if all assets are in property?
  • Have retirement plans been based on the fund earning tax-free income?

We’ll be reaching out to those clients impacted directly – ie anyone with super balance in excess of $1.6M to talk specifically about the structure of their estate – but we wanted share this example with you, so that you may share with your family and friends if you think they may be impacted.


The information provided is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.  Liberum Financial and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 Australia Credit Licence No 357306 trading as Fortnum Financial Advisers.