Estate Planning and Wealth Transfer

 

Child Advancement Option

Invest on behalf of a child under the age of 16 and transfer ownership to that child on a date selected by you. The only requirement is that the transfer must occur between the child’s 10th and 25th birthday. On the transfer date (known as the “vesting” date) ownership of the policy passes to the child free of any Capital Gains Tax (CGT). Should you as Bond owner pass away or become bankrupt before the transfer date, the Life Events Bond is held by your personal legal representative / executor(s) until the vesting date.

 

Beneficiary Nominations

Nominate one or more beneficiaries who will receive the Bond’s proceeds (tax free) on your death as the last surviving life insured. The proceeds will be passed directly to your beneficiaries and not form part of your estate¹. Nominations can be changed at any time.

 

Case Study - Child Advancement Option

Lois is a self-funded retiree with 3 grandchildren aged 10, 12 and 15. Lois wants to invest $25,000 for each grandchild and transfer the Life Events Bond’s ownership to them on their 25th birthday. As Lois is in her late sixties, she wants certainty that the funds will pass to her grandchildren whether this occurs during her lifetime or not. Lois establishes 3 Life Events Bonds, 1 for each grandchild, using the Child Advancement Option and nominates each grandchild’s 25th birthday as the vesting date. Lois remains in control (as owner of the Bond) up until the vesting date when full ownership switches to her grandchildren. If Lois dies before the vesting date the estate would be responsible for the Bond until the child reaches vesting age. Assuming the funds earn 5% pa each year they are invested, Lois' grandchildren will receive between $40,722 and $51,973 to use as a house deposit, pay off University fees or purchase a new car, taking the pressure off at an important point in their life. If by the vesting date the Bond has been open for 10 years then proceeds can be withdrawn with no tax consequences for her grandchildren.

 

Case Study - Beneficiary Nominations

Henry and Mary, aged 70 and 68, have just become grandparents again. They decide to set up an investment that can be shared equally amongst their 3 grandchildren.   Henry and Mary open a Life Events Bond with $60,000 and nominate their 3 grandchildren as beneficiaries each receiving a 30% share. Mary’s sister recently died of cancer and they decide to leave a 10% share to the Cancer Council of Australia. If Henry & Mary have additional grandchildren they can simply change the Beneficiary Nominations and percentage allocations. Funds will pass to their nominated beneficiaries outside of the Estate. Care is needed in NSW as investment bonds may be included in the notional estate if a family provision challenge is made. We recommend you seek independent legal advice.

 

¹ Care is needed in NSW as investment bonds may be included in the notional estate if a family provision challenge is made. We recommend you seek independent legal advice.

 

Download the PDS/application form

 

 

 

KeyInvest is a trading name of KeyInvest Ltd ABN 74 087 649 474 AFSL 240667.   KeyInvest is not authorised to carry on business in any country other than Australia. The information contained in this website is directed to and available for Australian residents only. Copyright © KeyInvest 2017 unless otherwise noted.

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