Estate vs Non-Estate Assets: What’s the Difference?

Navigating the complexities of estate planning, from distinguishing your assets to understanding the nuances between superannuation, life insurance and trust accounts can feel super overwhelming. So, it’s completely understandable that amidst all the legal jargon, things can start to, well, blur. Luckily, we’re here to help simplify this process for you.

Let’s make it easier to grasp and manage your affairs, shall we? Ahead, discover the difference between estate and non-estate assets.

What are estate assets?

‘Estate assets’ refers to property you can distribute by the terms of a Will. When you write a Will, you choose who inherits your things when you’re not around anymore. These are your ‘estate assets.’ However, some items, like a special family heirloom, may not be yours to give away. This could be because someone else automatically gets it or decides who receives it. The bottom line? Not everything you own can be given away in your Will… only certain things.

What are non-estate assets?

Non-estate assets are assets that do not form part of your estate and can’t be controlled by your Will. As for what assets classify as non-estate assets, these can be:

Assets that you own jointly with another individual (like a joint bank account)
Assets held in trusts and companies
Superannuation funds
Life insurance funds.

FAQs

Are my bank accounts estate accounts?

It depends on the account type. If you're the sole owner of the bank account, then yes, the balance is considered an estate asset. However, if it's a joint bank account, it becomes a non-estate asset. In the event of a death, once the bank is informed, the account shifts to being solely owned by the surviving owner.

Is a Family Trust/Discretionary Trust part of my estate?

Nope, it’s not. A Trust is a distinct legal entity independent of your estate. This means that it will be overseen by the individual or entity specified in the trust deed.

If I own a company, can I distribute its assets in my personal Will?

Again, no. This is because you don’t directly own the company assets – these are owned by the company itself, a separate legal entity. However, your shares of the company may be allocated in your Will and will therefore form part of your Estate.

Why are my superannuation and life insurance funds not in my Will?

This is a great question! Superannuation and life insurance operate independently from your Will, each following its own procedures upon your death. While you can't simply include superannuation in your Will (as it’s controlled by a fund trustee who decides where the money goes), you can influence its distribution by completing a binding death benefit nomination (BDBN). Through a BDBN, you can specify who receives your superannuation funds. Just remember that you’ll need to update this nomination every three years to ensure it aligns with your current wishes.

Wrap up

Now that you know your estate assets from your non-estate assets, it’s time to learn something else!

If you found this helpful, you may benefit from reading the following guides:

Looking to start or update your legal Will? Get started now, or contact our friendly team for expert advice on all things Wills, Probate and Prepaid Funerals.

Disclaimer: The content of this blog is intended to provide a general guide to the subject matter. This blog should not be relied upon as legal, financial, accounting or tax advice.