Author: Centuria Investment Bonds
Date: 18 October 2017
Investors spend a lifetime saving and building wealth; however, without an effective estate plan, the death of a spouse or parent can trigger a range of unintended consequences. An estate plan defines how an investor wants their assets to be managed during their lifetime and how they want them disbursed after death.
Neil Rogan, the general manager of investment bonds at Centuria, explains how the recent changes to super can impact estate planning, and how investment bonds can be used to fill this role.
These changes impact investors’ ability to contribute lump sums into super. Finding a wealth creation vehicle that also provides estate protection and planning has become increasingly important.
An investment bond is an insurance policy, with a life insured and a beneficiary, but works like a tax-paid managed fund. Importantly for estate planning, an investment bond is a tax effective structure. Like superannuation, tax is paid within the investment bond rather than personally by the investor. The maximum tax paid on the earnings and capital gains within an investment bond is 30%, although franking credits and tax deductions can reduce this.
A key feature of investment bonds is that if the investment is held for 10 years, no personal tax is paid by the investor.
When it comes to estate planning, investment bonds provide five clear benefits to investors:
After a lifetime building wealth, don’t waste it by failing to plan. Despite the changes to super, tax effective wealth creation strategies exist to enable a comfortable retirement and provide viable estate planning solutions.