Estate planning gives you a final say
Australians inherited an estimated $150 billion in 2024, an increase of more than 70 per cent in a decade, according to a JBWere report.i
It’s a number that’s predicted to grow more rapidly over the coming 20 years to $5.4 trillion, the report finds.
Managing this flow of wealth to family groups, often complicated by divorce and remarriage as well as children from previous marriages, can lead to disputes and legal challenges if not carefully handled.
Legal firms agree that the number of challenges to wills has been increasing each year with adult children most likely to take action. One firm estimates more than 60 per cent of claims are brought by adult children and around 20 per cent by partners or ex-partners.ii
Yet, many still do not have wills.
In the latest research available, the Australian Law Reform Commission found that almost 40 per cent of adult Australians did not have a will although, this figure declined to 7 per cent for those older over 70.iii
If you die intestate in Australia, your estate is distributed according to state and territory laws, and the laws vary slightly between each state and territory. Generally, the estate goes to the next of kin starting with the surviving spouse or partner followed by children, parents, siblings and then other relatives. If no relatives can be found, the estate may go to the government.
So, if it is important to you to have a say in how your assets will be distributed, a will is a must.
Meanwhile, for those in a new partnership but have children from a previous marriage, a binding financial agreement can be a useful way of protecting your partner’s interests if something happens to you.
It’s a legally enforceable contract that details how assets, liabilities and responsibilities will be divided if you separate, divorce or one partner dies.
Distributing your wealth now or later can depend on the family dynamics, any businesses you may own and whether you have a passion for creating a legacy – donating to a charity, for example. Alternatively, you may prefer to spend it on yourself and your partner to enjoy your later years.
The housing crisis and the emergence of the ‘bank of mum and dad’ has increasingly seen wealth transfer happening while the benefactor is still alive. You may wish to help your children or grandchildren to get a foot onto the property ladder, contribute to their superannuation, or pay their school fees or student loans. But it’s crucial to obtain professional advice to understand any consequences of giving lump sums, particularly those receiving government entitlements, as they could potentially be impacted.
Another alternative is testamentary trust. This is commonly used to provide financial security for beneficiaries, such as family members or loved ones. It is used to manage and distribute assets according to specific instructions laid out in the will.
It can be specifically written and incorporated in your will and takes effect when you pass away. It is administered by a trustee, who you would also name in your will. The trustee would take legal control over the trust assets and is responsible for the management and distribution of the assets to the beneficiaries, based on the instructions in the trust.
This strategy could also potentially minimise any tax liabilities. However, there are a lot of things you need to consider when deciding whether or not a testamentary trust is right for you.
Some might prefer to establish or contribute to a charitable foundation as a way of building a family legacy. It’s a move that allows you to have some say over how your hard-earned wealth is distributed and could involve family members to allow them to build knowledge and experience in philanthropy.
Most importantly, creating a family legacy relies primarily on the strength of family relationships. Any disputes will more than likely be magnified after a death and some relationships may be strained, so it may be helpful to discuss your intentions with family members and any other beneficiaries. Be clear about your plans and don’t ignore negative reactions.
After all, wealth transfer isn’t just about finances – it’s about securing family harmony and ensuring your legacy is preserved according to your wishes. Taking the time to plan, communicate openly with loved ones, and seek professional guidance can make all the difference.
ii The numbers don’t lie | Solomon Hollet Lawyers
iii Wills | ALRC
Bucketing is a smart way to manage your money without complicated budgets or spreadsheets. You set up multiple bank accounts called ‘buckets’ and use each one for a specific purpose, like bills, savings or entertainment. Once your buckets are set up, it’s easier to see and control how you spend and save your money. This strategy is beneficial for anyone looking to save, reduce debt, control spending or achieve bigger financial goals. Bucketing can also help you save your money for larger but infrequent bills like car registration, school fees and energy bills.
It’s easy to start bucketing and saving when you know the exact steps involved in the process.
A good starting point is working out how you spend your money. An online expense tracker like the Spending tool, for instance, is excellent to help you see where your income goes. Next, group each category of your spending into a few themes. This could look like regular and daily expenses, emergency funds, splurge and savings. Then add up the amounts in each theme. These themes become your buckets. You can have as many buckets as you like, but here’s an example of how to group them:
Bucket 1 – Regular and daily expenses
This is for regular bills, rent, mortgage, debts, groceries, transport, school fees, insurances and holidays. This account should be linked to a debit card.
Bucket 2 – Spending or splurge money
Use this bucket for fun money to splurge on things like socialising or treating yourself and others. This account should be linked to a debit card. You can use card controls to take control of your spending.
Bucket 3 – Emergencies and safety money
This one is for the big or unexpected expenses that can catch you off guard, like home or car repairs, dental work or paying off debts. This account should earn interest and have no debit card, so you’re not tempted to spend.
Bucket 4 – Savings
Use the savings bucket to put aside money for things like travel, a new car or reducing debt. Ideally this should be an account that earns interest and has no debit card.
To implement this financial strategy, you’ll need to get started with a basic transaction account with your bank. After you’ve opened one account, it’s easy to open or add extra savings or transaction accounts.
Learn how to open a bank account online.
Handy hints for setting up your buckets
Rename your accounts
When you open your accounts, you can name each account to match its purpose. For example, you could name them ‘Spending bucket’, ‘Fun bucket’, ‘Safety bucket’ and ‘Savings bucket’.
This is a very important part of bucketing. The idea is money from your income ‘pours’ into each bucket in certain amounts that you decide. Ideally, all your income or wages should go into the first account, and from there you transfer money into each of your buckets.
As a guide, consider these percentages of your income for each account or bucket:
Now that you’ve worked out how much money goes into each of your accounts, you can automate transfers from your first account into the others. It’s a good idea to set up the transfers so they occur on the same day every month, soon after you get paid. This will help you avoid overspending on pay day.
Now you’re ready to start enjoying the benefits of bucketing.
Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/budget-saving/money-bucket
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2025 National Australia Bank Limited (“NAB”). All rights reserved.
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When and how you can access your super to start an account-based pension.
If our working years can be regarded as the time when we aim to build up our superannuation savings, our retirement years can equally be regarded as the time when we aim to spend them.
At least that’s the objective for most Australians. Which generally leads to the question: how do I start accessing my super funds when I do stop working, or maybe even before I stop working?
This article focuses on the basics, including the general eligibility rules around accessing your super and how to switch your super accumulation account to an account-based pension.
To legally access your super, you generally need to have met a condition of release after turning 60-years-old.
You can do so by either stopping work completely (retiring) or by keeping working and starting a transition to retirement income stream (TRIS).
Doing so can enable you to reduce your current working hours and use your TRIS pension payments to top up your part-time income.
In either case, you have the options of turning on a pension income stream, making a lump sum cash withdrawal, or doing a combination of both.
Importantly, to start accessing your super, you will need to roll some or all of it over from your accumulation account into a newly created pension account.
Those starting a TRIS continue to receive compulsory super guarantee payments from their employer (which are taxed at the normal rate of 15%) into their super accumulation account. The funds held in a pension account can be accessed, however keeping in mind that investment earnings in the pre-retirement phase are also still taxed at 15%.
Most super funds offer pension account products and different investment options, similar to their accumulation account products. Those with a self-managed super fund should contact their SMSF accountant and/or speak to us to facilitate the super rollover and pension account conversion processes.
You may need to contact your super fund to find out their process, which is typically as simple as lodging a request with your fund by filling out a form and providing information such as how much of you super you want to roll over, and where to.
Once your funds are in a pension account you could then take some out as a lump sum. The Australian Tax Office (ATO) has mandated minimum annual withdrawal amounts, which depend on your age.
There is a limit on the maximum amount that can be transferred as a tax-free retirement income stream from super to a pension account, known as the transfer balance cap. This is currently set at $2 million. The ATO keeps track of how much you transfer, and if you go over the cap it will levy an excess transfer balance tax.
If you have more than $2 million in super you have the option of keeping the excess in your super account and paying up to 15% tax on your earnings, or you can withdraw the excess super as a lump sum.
If you’re aged 60 or over and fully retired, any income earned on your pension assets is tax free and so are the pension payments you withdraw.
Also, a major advantage is that the profits from any investments sold within a pension account are completely capital gains tax free.
Once you’ve rolled over some or all of your super to an account-based pension you are required by law to withdraw a minimum pension amount each financial year, which is a percentage of your account balance based on your age.
For new pensions, the minimum withdrawal amount is calculated on a pro-rata basis from when a pension commences to the end of the financial year.
There are restrictions on how much can be withdrawn tax free through a TRIS in a financial year if you’re under 65, until you’ve met a condition of release. The minimum withdrawal amounts is 4% of your super balance and the maximum is 10%.
The table below shows the required minimum withdrawal rates if you’re in pension phase and are fully retired.
| Age on 1 July of pension commencement and on each 1 July thereafter | Minimum withdrawal amount based on pension balance for 2024/2025 |
|---|---|
| Under 65 | 4% |
| 65 to 74 | 5% |
| 75 to 79 | 6% |
| 80 to 84 | 7% |
| 85 to 89 | 9% |
| 90 to 94 | 11% |
| 95 and over | 14% |
Source: Australian Tax Office
Any amounts leftover in your pension account when you die will go to your nominated beneficiaries. Depending on the type of beneficiary (reversionary, spouse, dependant or non-dependant) the amounts can be paid as an ongoing pension stream until the account runs out or as a lump sum.
If you’re wanting total financial flexibility in retirement, you could consider leaving part of your money in super, rolling over some of it into an account-based pension, and also withdrawing lump sums whenever you need to.
There are a range of benefits from adopting a combination of your options, although there may also be potential tax consequences for both you and your beneficiaries.
Managing the combination of a super accumulation account, an account-based pension, an Age Pension entitlement (if eligible), potential investment earnings outside of super, and irregular lump sum payments, can be highly complex.
Using our services is a worthwhile consideration as you weigh up all of your retirement options.
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
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Stay up to date with what’s happened in the Australian economy and markets over the past month.
Wars in Europe and the Middle East, volatile oil prices and shifting US policies are making headlines – but failing to dampen market optimism.
The ASX closed the financial year with a near 10% return – its strongest since the COVID-19 crisis and despite US tariff threats.
Despite tariff risks for the US economy, the S&P 500 index surged to a four-month high on hopes of future rate cuts and smooth trade negotiations.
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