How to Structure Assets for Tax-Efficient Inheritance

Last Updated: September 26, 2026

Planning how your assets will pass to the next generation is about more than simply having a will.

The way assets are owned, how superannuation death benefits are nominated, whether you have a family trust or business interests, and the tax characteristics of your investments can all affect what happens when you die.

Good estate planning brings these elements together. It also requires coordination between your financial adviser, solicitor and, where appropriate, registered tax agent.

This guide explains some of the key issues to consider when reviewing your estate structure. It is general information only and does not replace legal or tax advice tailored to your circumstances.

Start With a Full Inventory of Your Assets and How They Are Owned

The first step in estate planning is surprisingly simple: make a complete list of what you own and how each asset is held.

Ownership can affect who receives an asset when you die, whether the asset passes through your estate, and what tax consequences may arise.

A useful starting point is to record three things:

Asset Ownership Intended recipient
Property, shares, cash, superannuation, business interests and other assets Individual name, joint names, trust, company or superannuation fund Who you would like to benefit and under what arrangements

The ownership structure matters.

For example, an asset held as joint tenants will generally pass to the surviving joint tenant through survivorship rather than under the terms of your will. By contrast, assets held solely in your name will generally form part of your estate and are dealt with through your estate planning arrangements.

Superannuation also requires separate consideration because it is generally not dealt with by your will. The trustee of the superannuation fund determines who receives a death benefit, subject to the fund’s governing rules, superannuation law and any valid nomination.

Keep Your Records Current

Estate planning should not be treated as a one-off exercise.

Major changes such as purchasing or selling property, refinancing, establishing or closing a company or trust, changes to relationships, or changes in your intended beneficiaries can all affect whether your existing arrangements remain appropriate.

Your solicitor should review your will and other legal documents when your circumstances change. Your financial adviser can assist with reviewing the financial structures and superannuation arrangements that form part of your overall estate plan.

Superannuation Death Benefits and Who Receives What

Superannuation can be one of the largest assets in an estate, but it does not automatically follow the instructions contained in your will.

The superannuation trustee generally determines who receives a death benefit, taking into account the fund’s rules, superannuation legislation and any valid death benefit nomination.

This makes it important to understand both who you want to receive your superannuation and how they will receive it.

Who Is a Dependant?

The definition of a dependant for superannuation death-benefit purposes is important because it can affect the tax treatment of the benefit.

Depending on the circumstances, a dependant can include:

An adult child who is not financially dependent on the deceased will generally be a non-dependant for tax purposes.

The distinction is important because superannuation death benefits paid to a dependant and a non-dependant can have different tax consequences.

The Main Nomination Options

Binding death benefit nomination

A valid binding nomination can require the trustee to pay your superannuation death benefit to the beneficiaries you nominate, provided the nomination satisfies the relevant legal and fund requirements.

Many binding nominations lapse after three years, although some funds offer non-lapsing arrangements. Check your particular fund’s rules and keep track of any expiry date.

Non-binding death benefit nomination

A non-binding nomination communicates your wishes to the trustee but does not generally require the trustee to follow those instructions. The trustee retains discretion, subject to superannuation law and the fund’s governing rules.

Reversionary pension

If you are receiving an eligible pension, you may be able to nominate a reversionary beneficiary so that the income stream automatically continues to that person following your death.

A reversionary pension can be particularly relevant when planning for a spouse or other eligible dependant. However, the rules surrounding reversionary pensions, transfer balance caps and the tax treatment of the resulting income stream need to be considered in the context of your particular circumstances.

Worked Example: $500,000 Superannuation Balance

Consider a superannuation balance of $500,000 consisting of:

If the benefit is paid to a qualifying dependant, the tax treatment can be substantially different from a payment to a non-dependant.

For example, a lump-sum superannuation death benefit paid directly to a dependant is generally tax-free.

A benefit paid to a non-dependant can result in tax being payable on the taxable component. The maximum tax rate generally includes 15% tax plus the 2% Medicare levy, giving a potential rate of 17% on the taxable component.

In the simplified example above, $400,000 of taxable component could potentially give rise to tax of up to $68,000 if the entire taxable component were subject to the 17% rate.

The actual outcome depends on the composition of the benefit, how it is paid, the recipient and their circumstances. This is why superannuation death-benefit planning should be reviewed as part of the broader estate plan.

What Should You Check With Your Super Fund?

Ask your super fund:

A nomination that was appropriate several years ago may no longer reflect your circumstances or intentions.

Testamentary Trusts and Tax-Efficient Inheritance

A testamentary trust is a trust established under a person’s will that comes into operation following their death.

A testamentary trust can provide flexibility in how estate assets are managed and distributed. Depending on the circumstances, it may also provide tax and asset-protection benefits.

However, testamentary trusts are not appropriate for every estate.

The decision should be made with appropriate legal and tax advice, particularly because the terms of the will, the assets transferred to the trust, the beneficiaries and the way income is distributed can all affect the outcome.

How the Tax Benefits Can Work

Income generated by assets held within a testamentary trust may be distributed among eligible beneficiaries in accordance with the trust’s terms and applicable tax law.

Special tax rules can apply to income derived from assets of a deceased estate and distributed to minors. However, the rules are technical and the tax outcome depends on the source and nature of the income and the circumstances of the trust and beneficiaries.

A testamentary trust should therefore not be established simply on the assumption that it will produce a particular tax saving.

The Trade-Offs Are Real

A testamentary trust can involve:

For some families, the additional complexity may not be justified. For others, particularly where there are substantial assets, investment properties, businesses, minor beneficiaries or asset-protection considerations, a testamentary trust may warrant consideration.

When Might a Testamentary Trust Be Worth Considering?

It may be appropriate to discuss a testamentary trust with your solicitor where:

Your solicitor should determine whether a testamentary trust is appropriate and draft the relevant legal documentation.

Corporate Trustee or Individual Trustee?

A testamentary trust can have an individual or corporate trustee, depending on the circumstances.

A corporate trustee can provide continuity because the company remains in existence when an individual director dies or becomes incapacitated, subject to appropriate succession arrangements.

However, establishing and maintaining a company involves additional costs and administration.

There is no universal answer. The appropriate trustee structure should be discussed with your estate-planning solicitor.

What Should Be Included in Your Will?

Your will is a legal document and should be prepared and reviewed by an appropriately qualified solicitor or estate-planning lawyer.

Depending on your circumstances, your solicitor may need to consider:

Your financial adviser can help identify financial and superannuation issues that should be considered as part of the overall estate-planning process, but the legal drafting and advice regarding your will should be provided by your solicitor.

Capital Gains Tax on Inherited Property and the Two-Year Rule

Inheriting an asset does not necessarily mean that capital gains tax is immediately payable.

However, CGT can become relevant when an inherited asset is subsequently sold.

The treatment of inherited property is particularly dependent on factors such as:

There is a specific two-year rule that can provide a full or partial main-residence exemption in qualifying circumstances. It is not an automatic CGT exemption for every inherited property.

For certain qualifying dwellings, disposal within two years of the deceased’s death can allow the relevant capital gain to be disregarded. Extensions can also be available in limited circumstances. The precise treatment should be confirmed based on the facts of the estate.

For example, an inherited property that was the deceased’s main residence and was not being used to produce income immediately before death may qualify for specific CGT treatment if sold within the relevant period.

If the property is retained, rented, used as another person’s main residence, or sold outside the relevant period, the calculation can become considerably more complex.

A registered tax agent should be consulted where the tax treatment of an inherited property needs to be determined.

Joint Tenancy, Tenants in Common and Asset Distribution

The way property is owned can materially affect what happens when an owner dies.

With joint tenancy, the deceased owner’s interest will generally pass automatically to the surviving joint tenant or tenants through survivorship rather than under the deceased’s will.

With tenants in common, each owner holds a separate interest that can generally form part of their estate and be dealt with under their will.

This distinction can be important where:

Before changing ownership, obtain legal and tax advice. Changing the way an asset is owned can itself have legal, tax, stamp-duty or CGT consequences.

Cross-Border and Digital Assets: The Gaps Many Plans Miss

Estate planning becomes more complicated when assets or beneficiaries are located overseas.

Overseas property, foreign investments, bank accounts, pensions and other interests can involve the laws and tax systems of more than one country.

Digital assets also need consideration.

These can include:

Practical steps can include maintaining a secure record of relevant accounts, documenting ownership and ensuring your executor can identify the assets.

Do not place passwords or sensitive security information directly into a will. Instead, discuss an appropriate secure system for providing your executor with access to the information they need.

Where overseas assets are involved, obtain advice in the relevant jurisdictions before finalising your estate-planning arrangements.

Worked Example: Structuring a $2 Million Estate

Consider a couple with:

This simple example demonstrates why an estate cannot be planned by looking only at the will.

The home may pass by survivorship rather than under the will.

The superannuation may be distributed according to the fund’s rules and any valid death benefit nomination.

The personally held shares may form part of the estate and be distributed according to the will.

The tax treatment can also differ between the assets and depending on who ultimately receives them.

The appropriate structure will depend on the couple’s family circumstances, intended beneficiaries, tax position, ownership structures and objectives.

There is no single estate structure that is appropriate for everyone.

Conclusion: Review Your Structure Before Circumstances Force It

Estate planning is not simply about writing a will.

Your will, superannuation nominations, ownership structures, trusts, insurance, investments and tax arrangements can all interact.

Circumstances also change.

A relationship changes. A child becomes financially independent. A property is purchased. A business is sold. A superannuation pension changes. A beneficiary moves overseas.

Each of these events can potentially affect whether your existing arrangements remain appropriate.

A regular review can help identify where your financial structures may no longer align with your intentions.

At Veyron, we can help you understand the financial and superannuation aspects of your broader estate-planning position and identify issues that may need to be addressed with your solicitor or tax adviser.

We do not prepare wills or provide legal advice. Your solicitor or estate-planning lawyer should provide advice on your will, testamentary trusts and other legal estate-planning documents.

General Disclaimer

This article provides general information only and has been prepared without taking into account your personal objectives, financial situation or needs. It is not personal financial advice, tax advice or legal advice. Financial planning, superannuation, investments, insurance, taxation, social security and estate planning involve complex rules and considerations that may change over time.

Before making a financial decision, you should consider whether the information is appropriate for your circumstances and, where appropriate, seek professional advice. Investment returns are not guaranteed and past performance is not a reliable indicator of future performance.

Where Veyron provides personal financial advice, the advice will be provided within the agreed scope and based on the information relevant to your circumstances.

Frequently Asked Questions

Does Australia have an inheritance tax?

Australia does not currently impose a general inheritance or estate tax on assets simply because they are inherited. However, that does not mean an inheritance is necessarily tax-free.

Capital gains tax can arise when an inherited asset is subsequently disposed of, and superannuation death benefits can have different tax consequences depending on who receives them and the components of the benefit. Income earned by a deceased estate or inherited investment can also have tax consequences.

The appropriate tax treatment should be confirmed with a registered tax agent.

What is the two-year rule for inherited property?

The two-year rule can provide a CGT concession for certain inherited dwellings.

In qualifying circumstances, if an inherited dwelling is disposed of within two years of the deceased’s death, the main residence exemption may apply even where the beneficiary did not live in the property.

However, eligibility depends on the circumstances of the deceased, the property, the beneficiary and the way the property was used. Extensions may also be available in limited circumstances.

The two-year rule should therefore not be treated as an automatic exemption applying to every inherited property.

What are the superannuation death benefit tax rules I should know?

Superannuation death benefits generally consist of a tax-free component and a taxable component.

The tax outcome can depend on whether the recipient is a dependant for tax purposes and whether the benefit is paid as a lump sum or income stream.

A qualifying dependant will generally receive a lump-sum death benefit tax-free, while a benefit paid to a non-dependant can result in tax being payable on the taxable component.

Valid death benefit nominations and, where appropriate, reversionary pension arrangements can form an important part of superannuation estate planning.

Because the rules are technical, your specific circumstances should be reviewed rather than relying on a general example.

How can a testamentary trust assist with tax planning?

A testamentary trust is established under a will and can provide flexibility in managing and distributing estate assets.

Special tax rules can apply to certain income derived from assets of a deceased estate and distributed to beneficiaries, including minors. However, the tax outcome depends on the particular trust, assets, income and beneficiaries.

A testamentary trust can also provide additional control over how inherited assets are managed.

The decision to establish one should be made with your solicitor and registered tax adviser, with financial advice considered where appropriate.

Do I need a solicitor if I already have a financial adviser?

Yes, in most cases estate planning involves several different areas of professional advice.

Your financial adviser can help you understand your investments, superannuation, insurance and other financial structures and identify issues that may need to be addressed.

Your solicitor or estate-planning lawyer should provide legal advice and prepare or update your will and other legal estate-planning documents.

A registered tax agent can advise on specific tax consequences where required.

The most effective approach is often to have these professionals work together so that the legal, tax and financial aspects of your estate plan are consistent.

How often should I review my estate plan?

There is no single review period that is appropriate for everyone.

Your estate plan should be reviewed whenever there is a significant change in your circumstances, such as marriage or separation, the birth of a child or grandchild, a death in the family, a major property transaction, a change in business ownership, a significant change in wealth, or a change to your intended beneficiaries.

Even without a major event, periodic reviews can help identify whether your will, superannuation nominations and financial structures continue to reflect your intentions.

Get A Free Consultation