Passing on wealth in Australia, 2026: no inheritance tax, super death benefits, aged care, and the part the law can't carry

• Australia has had no inheritance or estate tax since the Commonwealth abolished its duty in 1979 and the last state duty ended in 1982.

• Superannuation death benefits are tax-free to a dependant and taxed at 15% plus the 2% Medicare levy on the taxable component (30% plus Medicare on any untaxed element) when paid to an adult child or other non-dependant.

• Inherited assets carry capital gains tax when the heir sells; a main residence sold by the estate or the heir within two years of death is exempt.

No. Nothing is charged on the estate or the recipient at death. The tax arrives later and sideways: capital gains tax when an inherited asset is sold (the heir inherits the deceased's cost base for assets bought after 20 September 1985, and market value at death for earlier ones, with the 50% discount available after twelve months counted from the deceased's purchase), and the superannuation death-benefit tax when super goes to a non-dependant. Between them they can take more from an unplanned estate than a modest inheritance tax would: a A$1.5 million super balance with an 80% taxable component paid to two adult children loses about A$204,000 in tax that a withdrawal the week before death would have avoided.

Super is not part of the estate unless the nomination sends it there. A binding death benefit nomination directs the trustee; a non-binding one merely guides; and most binding nominations lapse every three years unless the fund offers a non-lapsing form. Paid to a spouse, a child under eighteen, a financial dependant or someone in an interdependency relationship it is tax-free; paid to an adult child, the taxable component is taxed at 17%. Families with large balances and adult children plan around it with recontribution strategies (withdraw tax-free after sixty and recontribute as non-concessional, converting taxable component to tax-free within the A$120,000 annual cap or the three-year bring-forward), reversionary pensions to a spouse, and withdrawal timing under an enduring power of attorney in the final weeks, all of which need the balance to still be in the member's hands. Self-managed funds add a second layer: the deed decides whether a nomination binds, and control of the fund passes to whoever becomes trustee or director of the corporate trustee. Pension and super death benefits has the detail.

Probate is granted by the Supreme Court of the state after a notice of intention is published, typically within six to eight weeks of application; small estates and jointly held assets sometimes avoid it. There is no forced heirship, but every state allows family-provision claims by spouses, de facto partners, children and dependants who were left out or left too little, and the courts grant them often enough that a will that disinherits a child needs a reason on the record, usually in a statutory declaration kept with the will. In New South Wales the notional estate rules can even reach assets given away or held in super before death. Marriage revokes a will; divorce revokes gifts to the former spouse in most states. Informal wills, including a note on a phone, have been admitted by the courts where intention was clear, which is a reason to make a formal one.

The Australian instrument of choice for a larger estate: a trust created by the will, which protects the inheritance from a beneficiary's creditors and divorce and, because income paid to minor children from it is taxed at adult rates rather than the 66% minors' rate, funds school fees efficiently. Most estate lawyers recommend one above a modest size, and the will can give each child the choice of taking their share outright or through the trust. Trusts and structures has the comparison.

The Aged Care Act 2024, in force from 1 November 2025, reset the means test and the contributions for residential care: a hotelling contribution and a non-clinical care contribution for those who can afford them, a lifetime cap of A$130,000 or four years on the care contribution, and a provider retention of 2% a year of the refundable accommodation deposit for up to five years. The home is counted in the means test up to a cap of about A$206,000 unless a protected person lives there; the accommodation payment can be a refundable deposit, a daily payment or a mix; and the decision to keep, sell or rent the home to fund care is the largest financial decision most Australian families make in their seventies. Aged care and retirement living works the numbers.

Enduring powers of attorney and enduring guardianship are state instruments with different forms and witnessing rules (Queensland and Victoria combine financial and personal matters in one document; New South Wales keeps them separate); a document made in one state is generally recognised in others under mutual-recognition provisions. Australia has no post-mortem right to a person's likeness; a statutory action for serious invasions of privacy applies to the living from 10 June 2025. There is no fiduciary-access law for digital accounts; the New South Wales Law Reform Commission recommended one in 2019 and nothing has followed, so executors rely on platform legacy tools and the asset record.

Discretionary trusts for the operating business and the investments, with the appointor's power passing under the will; Division 7A on company loans; the small-business capital gains concessions before a sale (the fifteen-year exemption, the 50% active-asset reduction, the A$500,000 retirement exemption, the rollover); SMSF succession and the death-benefit planning above; the proposed Division 296 tax on earnings above A$3 million in super; and the family constitution for a family with an office. High-net-worth estate planning.

The lapsed binding nomination. Three years pass, the nomination lapses, the trustee decides, the super goes to the estate or to a non-dependant, and the largest asset in the family pays 17% and a year in probate.

An estate lawyer for the will and testamentary trust, a financial planner with SMSF and aged-care accreditation for super and care, an accountant for the cost bases. Bring the super statements and every nomination.