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Estate planning in 2018

multi generational family   lr

Promoted by Centuria Capital Limited.

Investors spend a lifetime building wealth – don’t allow the death of a spouse or parent to trigger a range of unintended consequences. Here follows a look at recent changes that can impact estate planning, and how investment bonds can help to ‘change-proof’ your estate plan, from Centuria Life.

Change and its impact

Regardless of change, nothing impacts the importance of a sound estate plan. While a financial plan focuses on creating and preserving wealth, an estate plan defines both how you want your assets managed during your lifetime and disbursed after death.

Several changes, both implemented and proposed, can and will impact estate planning. This reinforces the fact that your estate plan is not a ‘set and forget’ strategy; rather it’s one you should regularly review with your financial adviser.

Changes to superannuation 2017

There was a raft of changes made to superannuation last year, which are outlined in an earlier article, Estate planning in the post 1 July 2017

Those changes particularly impacted higher net worth individuals and highlighted the importance of finding an effective wealth building vehicle that also provides estate protection and estate planning opportunities.

Prospective changes to superannuation

Last year’s changes to super may not be the last. At a keynote address on 4 April 2018, Senator Hon Kristina Keneally outlined a range of Labor policies targeted at superannuation, each with the potential to impact your retirement and estate planning strategies. They include:

  1. Changes to the dividend imputation system, which have already received significant media attention.
  2. Discretionary trust reform – discretionary trusts are used by many investors as estate planning vehicles.
  3. Changes to catch up concessional contributions – the speech mentioned opposition to these measures, however it’s not clear whether catch up contributions will be reduced or eliminated.
  4. Lowering the non-concessional contribution cap further, from $100,000 to $75,000
  5. Lowering the income threshold further, from$250,000 to $200,000,at which point 30% rather than 15% contribution tax is paid.

While there’s no timeline in place, and of course, an election to occur and legislation to be passed, it’s reasonable to expect further change, whichever party is elected.

Investment bonds can ‘change proof’ your estate plan

An investment bond can help you protect your estate plan against unfavourable change in the following ways:

  1. Tax effective

Regardless of the changes made to tax payable on super contributions, capital gains or income, tax is paid within the investment bond rather than personally. 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 effective tax rate. Importantly, if an investment bond is held for 10 years, no personal tax is payable.

  1. Paid out tax-free

In the event of the bond holder’s death, the investment proceeds are paid tax-free to dependant and non-dependant beneficiaries, regardless of how long the investment has been held.

  1. Ideal for blended families

Investment bonds are suitable for blended families that have separate estate planning needs. The investment structure gives parents certainty that their nominated beneficiaries will receive their bequest without challenge from other family members.

  1. Enhanced process

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

  1. Beneficiaries

Investment bonds provide certainty around passing on wealth; you can nominate beneficiaries, who then receive benefits directly rather than via the estate.

Investment bonds enable you to combine wealth building and estate planning to ensure you get the right assets, into the right hands, at the right time, irrespective of regulatory change.


Disclaimer: Suitability of a Centuria Investment Bond will depend on a person’s circumstances, financial objectives and needs, none of which have been taken into consideration in preparing this document. Prospective investors should obtain and read a copy of the Product Disclosure Statement (PDS) for any investment bond and consider the information in the PDS in light of their circumstances, objectives and needs before making a decision to invest. This document is not an offer to invest in any of Centuria’s Investment Bonds. An investment in any of Centuria’s Investment Bonds is subject to risk and Centuria will receive fees in relation to the management of its Investment Bonds as detailed in the PDS. Issued by Centuria Life Limited ABN 79 087 649 054 AFSL 230867.

Estate planning in 2018
multi generational family   lr
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Anonymous - What a load of rot! What is he comparing the detriment to, and how much does the GFC effects factor into his farcical calculations? ....
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