Do young people need a Will? Yes. You do not need to own a home or have substantial savings for estate planning to matter.
Even with relatively few personal assets, you may have superannuation, life insurance, savings and valuable personal belongings. These assets can create a much larger death benefit than you might expect.
Jake’s story shows exactly why this matters. At just 21 years old, Jake had modest personal assets but approximately $350,000 in superannuation and life insurance benefits. Because he did not have a valid Will or binding superannuation nomination, the outcome was very different from what he may have intended.
This article explains what happened and why young people should consider their Will and superannuation arrangements together.
Key takeaway: You do not need to be wealthy to need a Will.
- Young people can have significant superannuation and life insurance even with few personal assets.
- Superannuation does not automatically form part of your estate.
- A valid beneficiary nomination can affect who receives your superannuation death benefit.
- If you die without a valid Will, Queensland’s intestacy laws determine who receives your estate..
What this article covers
- Do young people need a Will?
- What happened to Jake?
- What happens to superannuation when you die?
- What went wrong in Jake’s case?
- What happens if you die without a Will in Queensland?
- Will vs superannuation: what is the difference?
- What could Jake have done differently?
- What should young people include in their estate plan?
- Why should you review your Will and super nomination together?
- Frequently asked questions about Wills and superannuation
Do young people need a Will?
Yes. You do not need to be wealthy or own property to benefit from having a Will.
Even if you have few assets in your own name, you may still have:
- superannuation;
- life insurance through your super fund;
- savings and personal belongings; or
- other financial interests.
A Will allows you to state who you want to receive the assets that form part of your estate. However, your Will does not automatically control your superannuation.
Your superannuation therefore needs separate consideration. You should check your fund’s beneficiary arrangements and whether you have a valid nomination in place.
MoneySmart explains that superannuation does not automatically form part of your estate. Depending on your circumstances and the rules of your fund, you may be able to nominate your legal personal representative so the benefit can form part of your estate.
What happened to Jake?
Jake was 21 when he died in a motorcycle accident.
At first glance, Jake did not appear to have a substantial estate. His personal assets included:
| Asset | Approximate value |
|---|---|
| Bank account | $5,000 |
| Surfboard | $300 |
| Clothes and furniture | Not specified |
| Debt | None |
Jake had been living with a few mates in a rental house near the beach after moving out of his Mum’s home. He was trying to save money while working at Dan Murphy’s.
His Mum and Dad had separated when he was three, and his Mum had raised him. Jake had no relationship with his Dad and had not seen him for nine years.
However, Jake had something else that his Mum did not realise could significantly affect his estate planning: superannuation with life insurance attached.
After Jake’s death, his Mum discovered that his superannuation and insurance death benefit totalled approximately $350,000.
| Jake’s financial position | Approximate amount |
|---|---|
| Personal assets | $5,300 plus clothes and furniture |
| Superannuation and life insurance death benefit | $350,000 |
This is what made Jake’s situation so significant. Although he had relatively few personal assets, his superannuation and life insurance created a substantial death benefit that required careful estate planning.
What happens to superannuation when you die?
Superannuation does not automatically form part of your estate when you die. The super fund trustee generally determines who receives the death benefit, taking into account any valid beneficiary nomination, superannuation law and the fund’s governing rules.
A superannuation death benefit may include:
- the superannuation you have accumulated; and
- life insurance held through your super fund.
Your beneficiary nomination can therefore play an important role in determining where the death benefit goes.
| Superannuation arrangement | What it generally means |
|---|---|
| No valid nomination | The super fund trustee generally determines who receives the death benefit in accordance with superannuation law and the fund’s rules. |
| Valid binding nomination | The trustee generally must pay the benefit to the nominated eligible beneficiary, provided the nomination remains valid and complies with the relevant requirements. |
| Legal personal representative nominated | Depending on the circumstances and the fund’s rules, the death benefit may be paid to your estate and then dealt with under your Will. |
Different super funds have different rules about beneficiary nominations. Some binding nominations may lapse after a set period, while others may not.
For this reason, check your super fund’s rules and review your nomination when your circumstances or wishes change.
Read the Australian Government’s guidance on superannuation death benefits.
What went wrong in Jake’s case?
Jake had not made a binding nomination regarding his superannuation.
A female friend, Greta, tried to claim part of the superannuation as a de facto spouse. After a stressful process for Jake’s Mum, the superannuation fund decided not to pay anything to Greta and instead paid the death benefit to Jake’s estate.
That created the second problem.
What happens if you die without a Will in Queensland?
When someone dies without a valid Will, they die intestate. Queensland’s intestacy laws then determine who is entitled to the estate.
In Jake’s circumstances, he did not have a spouse or children. Because he died without a Will, the Queensland rules of intestacy applied to his estate.
Under the Succession Act 1981 (Qld), where an intestate has no surviving spouse or issue but has a surviving parent or parents, the parent or parents are entitled to the estate. If both parents survive, they are entitled in equal shares.
As a result, the $350,000 death benefit paid into Jake’s estate was divided equally between his Mum and Dad.
| Beneficiary | Amount received |
|---|---|
| Jake’s Mum | $175,000 |
| Jake’s Dad | $175,000 |
Jake’s Dad, who had been absent from his life for many years, received $175,000.
That may not have reflected what Jake would have wanted.
Will vs superannuation: what is the difference?
Jake’s situation highlights an important point: your Will and your superannuation nomination are separate parts of your estate planning.
| Estate planning document or arrangement | What it generally deals with |
|---|---|
| Will | Assets that form part of your estate and who you want to receive them. |
| Superannuation nomination | Who you nominate to receive your superannuation death benefit, subject to superannuation law and your fund’s rules. |
| Life insurance through super | Insurance that may form part of the superannuation death benefit when you die. |
Your Will does not automatically control your superannuation. Your super fund generally deals with the death benefit separately, subject to the fund’s rules, superannuation law and any valid beneficiary nomination.
For some people, nominating their legal personal representative may be appropriate so that the superannuation death benefit becomes part of the estate. However, the appropriate arrangement depends on the person’s circumstances and the rules of the relevant super fund.
What could Jake have done differently?
Jake could have taken two important estate planning steps:
- Make a valid Will. He could have appointed his preferred executor and stated who he wanted to receive the assets forming part of his estate.
- Review his superannuation beneficiary nomination. Depending on the fund’s rules and his circumstances, Jake could have considered making a valid binding nomination, including a nomination in favour of his legal personal representative.
These steps would not necessarily prevent every dispute. However, they could have provided clearer instructions about Jake’s wishes and reduced uncertainty for his family.
What should young people include in their estate plan?
You do not need to be wealthy or own property before estate planning becomes relevant.
If you are a young adult, consider reviewing the following:
| What to review | Questions to consider |
|---|---|
| Your Will | Who should receive the assets that form part of your estate? |
| Your executor | Who do you trust to administer your estate? |
| Your superannuation | Who is nominated to receive your superannuation death benefit? |
| Your life insurance | Do you have life insurance through your super fund? |
| Your personal belongings | Are there particular items you want specific people to receive? |
| Your changing circumstances | Do you need to update your arrangements after marriage, separation, having children or another significant life change? |
MoneySmart recommends reviewing beneficiary nominations when your circumstances or wishes change and checking whether a binding nomination will expire.
Why should you review your Will and super nomination together?
A Will and a superannuation beneficiary nomination can affect different parts of your estate planning.
Reviewing them together can help you identify gaps between your Will and your superannuation arrangements. It can also help ensure your beneficiary nominations reflect your current circumstances and intentions.
This becomes particularly important when your circumstances change. For example, you may need to review your arrangements if you:
- start a new job or join a new super fund;
- move to a different super fund;
- enter a relationship or separate from a partner;
- have children;
- receive a significant inheritance or accumulate substantial savings; or
- change your intended beneficiaries.
Frequently asked questions about Wills and superannuation
Do I need a Will if I am young?
Yes. Being young does not mean you have no estate planning needs. You may have savings, personal assets, superannuation or life insurance through your super fund. A Will can also provide clear instructions about who should receive the assets that form part of your estate.
Does my Will cover my superannuation?
Not automatically. Superannuation is generally dealt with separately from your estate. Your super fund’s trustee will determine who receives the death benefit according to superannuation law, the fund’s rules and any valid beneficiary nomination.
What is a binding death benefit nomination?
A binding death benefit nomination is an instruction to your super fund about who should receive your superannuation death benefit. If the nomination is valid and binding under the fund’s rules, the trustee generally must follow it, subject to the law and the fund’s governing rules.
Can I nominate my estate to receive my superannuation?
Depending on the rules of your super fund, you may be able to nominate your legal personal representative as the beneficiary of your superannuation death benefit. If valid, this can result in the benefit being paid to the estate and dealt with under your Will. You should obtain advice about whether this is appropriate for your circumstances.
What happens if I die without a Will in Queensland?
If you die without a valid Will, you die intestate. Queensland’s intestacy laws determine who receives the assets forming part of your estate. The result may differ from what you would have chosen yourself.
Does life insurance through super form part of my estate?
Life insurance held through super can form part of a superannuation death benefit. The way the benefit is paid depends on the super fund’s rules, any valid beneficiary nomination and the requirements of superannuation law.
Have you reviewed your Will and superannuation nomination?
Having an up-to-date and valid Will is important for everybody, regardless of age, wealth or income.
Your estate plan should also take account of assets that may sit outside your estate, including superannuation and life insurance held through your super fund.
If you are a young adult or have recently experienced a significant change in your circumstances, it may be worth reviewing both your Will and your superannuation beneficiary nomination.
Wakerley Legal can assist with Wills and estate planning, including reviewing how your Will and broader estate planning arrangements work together.
If you would like advice about your Will or estate planning arrangements, contact Wakerley Legal to discuss your circumstances.