Is Your Superannuation Protected? A Common Estate Planning Oversight That Could Cost Your Family Thousands

At Symmetry Accounting & Tax Pty Ltd, we often see well-intentioned estate plans that miss a crucial detail—how superannuation is handled after death. Many Australians believe their super automatically transfers to their chosen beneficiaries tax-free. Unfortunately, that’s not always the case.

Without strategic planning, your super could be reduced by tax or even redirected by unintended claims. One highly effective way to safeguard your superannuation—and ensure it reaches your intended beneficiaries intact—is through a Superannuation Proceeds Trust (SPT).

What Is a Superannuation Proceeds Trust?

A Superannuation Proceeds Trust is a specially designed trust that’s embedded in your Will. Its sole purpose is to receive superannuation death benefits, including any associated life insurance held within your super fund, once you've passed away.

Unlike a general testamentary trust, an SPT is tailored to distribute superannuation funds specifically and in a way that maximises tax efficiency while preserving legal protection for your beneficiaries.

Why Is an SPT Important?

Not everyone is entitled to receive superannuation death benefits without incurring tax. Under Australian law, only certain individuals—such as a current or former spouse, dependent children under 18, full-time students aged 18–25 who are financially reliant, or those in an interdependent relationship with you—qualify as both super law and tax law dependents.

If your super ends up in the hands of someone outside of this narrow category (e.g. adult children, extended family, or charities), up to 30% of it could be lost to tax. Even worse, if your Will directs your super into a standard testamentary trust with broad beneficiaries, you might unintentionally disqualify otherwise tax-eligible recipients from receiving the funds tax-free.

An SPT avoids these traps by strictly limiting eligible recipients to those who meet both legal definitions of dependency—ensuring the tax-exempt status of your superannuation is preserved.

How Does It Work?

Think of the SPT as a ring-fenced container, written into your Will, that exclusively holds your superannuation death benefits. Only those legally recognised as dependents for both tax and super purposes can receive distributions from this trust.

Key features of an SPT include:

• Preservation of tax-free treatment for qualifying beneficiaries;

• Shielding your estate from unnecessary tax liabilities;

• Ongoing control of distributions, with your nominated trustee managing the timing and amounts under the terms you specify.
  

Key Benefits of an SPT

1. Tax Savings – Ensures your superannuation is passed on without triggering avoidable tax liabilities;

2. Enhanced Control – Allows you to set clear instructions on how and when beneficiaries receive distributions;

3. Asset Protection – Helps guard the superannuation against third-party claims, such as those from creditors or disputes.
   

Who Should Consider an SPT?

You may want to include a Superannuation Proceeds Trust in your estate planning if:

• You hold significant superannuation and have tax-eligible dependents;

• You want to ensure your super’s full value goes to your intended beneficiaries;

• You prefer to structure inheritances over time, rather than making immediate lump-sum distributions.
  

Don’t Let Your Loved Ones Face Unexpected Tax Burdens

At Symmetry Accounting & Tax Pty Ltd, we help you take a proactive approach to estate planning. Including an SPT in your Will can make a significant difference in the financial future of those you care about most.

If you’re unsure whether an SPT is right for you, call us today on 0420 970 369 or email us to schedule a confidential discussion.