17th July, 2026
Annuities are a retirement income option that some Australians consider when planning for their future. However, many people are unsure how an annuity interacts with their Will and whether it forms part of their estate.
Understanding the relationship between retirement income products and estate planning can help ensure your assets are managed according to your wishes.
What Is an Annuity?
An annuity is a financial product purchased with a lump sum amount. It is commonly obtained through an insurance company or financial institution as part of retirement income planning.
In exchange for the initial payment, the provider makes regular payments to the purchaser over an agreed period or for the person’s lifetime. Some Australians consider annuities because they can provide a predictable income stream during retirement.
However, the terms of each annuity can vary and may raise important estate planning questions, particularly when considering what happens after the owner’s death.
Does an Annuity Form Part of Your Estate?
A common misconception is that a Will controls every asset a person owns. However, some assets may be dealt with separately from the estate.
The outcome for an annuity depends on the specific terms of the product. Some annuities may allow payments to continue to another person, such as a spouse or nominated beneficiary. Others may end when the owner dies.
Therefore, understanding the terms of an annuity is important when preparing or updating an estate plan.
Can an Annuity Affect Your Estate Planning?
Although an annuity does not change the wording of your Will, it may affect your overall estate planning arrangements.
For example, a person may sell their family home and use part of the proceeds to purchase an annuity. As a result, their asset position may be different from when their Will was originally prepared.
This change may affect how they intend to provide for beneficiaries or distribute their remaining assets.
When Should You Review Your Estate Plan?
Major life and financial changes can be an opportunity to review your estate planning documents.
This may include:
- selling or purchasing property;
- entering retirement;
- purchasing an annuity;
- changing family circumstances; or
- acquiring significant new assets.
Additionally, it is important to consider other documents that work alongside your Will. These may include an Enduring Power of Attorney and superannuation beneficiary nominations.
How Do Annuities Fit Within a Broader Estate Plan?
A complete estate plan considers how different assets are owned, managed and distributed. This is because not all assets are controlled by a Will.
For example, superannuation, jointly owned property and some financial products may have separate rules regarding distribution after death.
Therefore, understanding how each asset is dealt with can help avoid unintended outcomes for beneficiaries.
Understanding Your Estate Planning Options
Understanding how an annuity interacts with your estate plan can help you make informed decisions about your assets and provide greater clarity for your beneficiaries.
Our experienced Wills and estates team at Castrikum Adams Legal assists clients throughout the Northern Rivers, including, Byron Bay, Ballina, Lennox Head, Bangalow, Mullumbimby, Brunswick Heads, Ocean Shores, Suffolk Park and Alstonville. Contact our team today to discuss your estate planning needs.
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The content of this Blog does not constitute legal advice, is not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any specific matters you or your organisation may have.