A simple, clear way to manage your clients’ estate planning needs

14 July 2016

Managing an estate can be stressful for all parties and in some cases take many months – even years. Even when the deceased has their affairs in order and a valid will, it can take at least a few months for the estate to be wound up and for beneficiaries to receive their distributions. And, there is always the possibility that the will could be contested, which will increase the time it takes to settle the estate and possibly result in unintended distribution of the assets in the estate.

There are strategies that may help avoid these complications and ensure that the deceased’s assets are distributed as intended, in a timely manner.

Investment bonds

Insurance (investment) bonds do not form part of the estate (unless the estate is the nominated beneficiary) and the proceeds are paid tax-free to dependant and non-dependant beneficiaries directly and commonly, within a few days of the death certificate and claim being presented.

Estate planning

Investment bonds are a useful estate planning tool, especially in circumstances where defined assets are intended for specific individuals.

Building wealth in an investment bond may reduce the risk of disputes over estates and enable the benefits to be paid more quickly.

Dying intestate

Should a person die without a valid will, assets that fall into the estate will be distributed according to the relevant state laws. With an investment bond, if a beneficiary is nominated, the proceeds will be paid directly to the beneficiary or entity regardless of whether a valid will exists or not.

Other advantages of investment bonds include:

  • No personal income tax on your investment during the term
  • No declaration of growth or income is required on your income tax return
  • No tax on any withdrawals (whether made before or after 10 years) if due to death, disability or serious illness of the Life Insured or unforseen financial difficulties of the investor
  • Investor funds are protected from creditors in the event of bankruptcy (if nominated Life Insured is the investor’s spouse)
  • No tax on proceeds paid directly to beneficiaries on death of the Life Insured.

For more information on how investment bonds can be used when estate planning, view the strategy or read more about the advantages of investment bonds.