Superannuation members should have a will but may prevent disputes among death benefit recipients if they instead adhere to state-based rules with regard to the distribution of their estate, a technical expert has noted.
Insignia Financial senior technical services manager Julie Steed said while it was advisable for superannuation members to have a will, the indisputable nature of state-based intestacy rules may work in favour of those without one.
Speaking at the SMSF Association National Conference 2024 in Brisbane last week, Steed said: “One of the things that we talk about at this conference is everyone should have a will.
“I think you shouldn’t be allowed to be an SMSF trustee unless you have a power of attorney document, but sometimes deliberately not having a will can be a valuable estate planning tool.
“The rules of intestacy are state based and unfortunately differ quite wildly, but the great thing is you can’t dispute them so if you expect there is going to be a fight or a dispute in your family and you find the laws of intestacy in your state are roughly what you would want anyway, then maybe tear up your will.”
She noted while many states use a decision tree to sort out where an estate will go, New South Wales laws were particularly complex and people should seek advice, particularly in the area of notional estates and the Family Provisions Act.
Returning to the decision tree, she gave an example of how intestacy laws could generate the same outcome as a will while avoiding any disputes.
“I’ve chosen the intestacy rules in Queensland because that’s where we are today and if I die without a will here, we have a decision tree [to work through],” she said.
“Firstly it asks if I had a spouse and if yes, did I also have children. If I didn’t have children, it all goes to my spouse and I’m probably not expecting a dispute.
“If I do have children, then my spouse gets the first $150,000 plus all my personal assets and where there is one child, the remainder of my estate is split equally between my surviving spouse and my one child.”
She added where there was more than one child, one-third of the estate goes to the spouse and the remaining two-thirds would be split among all the children.
“If that was roughly what I wanted and I know that one of my adult children hates my second spouse and is going to do everything within his power just to be nasty, I might just have a situation where this is perfect and I’m going to avoid all disputes and just run it that way,” she said.
“And if I don’t have any children or a partner, then it goes to my parents, then across to brothers and sisters, then to any of their children if they die, and onto grandparents, and then to aunts, uncles and cousins and then eventually ends up with the government, so that’s probably not a time that you would want to not have a will.”
