Can you withdraw a loved one’s super after death to save on tax?

I have a query regarding your recent article on wills. You seemed to be advocating withdrawing money from bank accounts or superannuation funds after the will-maker has died and before the financial institutions are notified. Is this legal?

If so, why can’t the executors remove all monies from a superannuation fund before informing the fund of the death of the account holder and so avoid the 17 per cent high tax normally incurred? This is clearly not allowed otherwise everyone would do it! I would be grateful if you could clarify this point.

It’s important to clarify strategies to save on superannuation “death tax”, as there are certain methods that will not work after death.Credit:

There is no suggestion about withdrawing money from superannuation to save the death tax after the member has died. My advice was to have the superannuation withdrawn before the death of the deceased because the strategy will not work after death.

Keep in mind that the money must be physically paid before death, which is why it is important to give the fund sufficient notice to ensure the payments are made before death. How long this takes will depend on the type of investment.

You have talked about the importance of a conflict clause in an enduring power of attorney. I discussed this with the NSW public trustee, who said they had never heard of such a term. Could you please give me an example?

A person with enduring power of attorney should not do anything for someone for whom they have decision-making capacity that will also benefit themselves. It’s called a conflict of interest. But there are situations where it can make sense for them to do so, and a special provision needs to be put in a power-of-attorney document to allow for this.

A common example is where an older couple, who are the enduring attorneys for each other, must sell their house in joint names to provide funds for a nursing-home bond for one of them, let’s say the husband.

The wife will want to buy a new home to live in as well. If the husband has lost his capacity, then the wife will be wearing two hats: co-owner of the home and the husband’s enduring attorney.

If she sells the home on behalf of both of them and uses some of the proceeds to pay his bond and the rest to buy a home just in her name, she may have engaged in a conflict-of-interest transaction.

Why? Because he would have been entitled to half the proceeds of sale – but if the bond was less than that, and she’s taken the balance of his share, combined it with hers, and bought the new home just in her name, she has benefited herself with his remaining funds.

This is an area where you need good legal advice. It’s a minefield.

You say that after 67 you cannot make a concessional contribution unless you pass the work test. My wife turns 67 in March 2026 and does not work. Can she make a concessional contribution to her fund (after selling an investment property) and use catch-up contributions after July 2025 up to February 2026? She will be over 67 when she lodges her return after July 2026, so will she get the $30,000 tax deduction to reduce her overall income and eventual tax?

Provided she is not 67 when she makes the concessional contribution, it will be tax-deductible. Keep in mind that to use catch-up contributions her superannuation balance at June 30, 2025 must be less than $500,000.

I notice you are using the deduction to reduce capital gains tax – seek expert advice because she may be able to get up to $130,000 in catch-up contributions.

In one of your responses, you said that a person would get higher super returns in pension mode. Can you explain how and why, please? Also, do the funds remain invested in your preferred allocation or “frozen” as a set amount?

A pension fund is a tax-free fund, whereas an accumulation fund pays 15 per cent tax flat on its income. A member is free to vary the asset allocation whenever they wish.

Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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