Investment bonds: advisers' door to estate planning
Investment bonds have not received much attention over the past five years but with a growing focus on estate planning by financial planners, bonds need to be revisited, according to IOOF investor solutions general manager Renato Mota.
Until now the bulk of the industry has been focused on superannuation, but with an aging population clients are starting to ask the question: what happens to money after super? Thus leading advisers into the estate-planning arena, Mota said.
He said that while some advisers may feel they don’t have the skills to deal with estate planning, investment bonds enable advisers to offer an estate planning strategy within their existing breadth of skill and knowledge base.
Investment bonds are a “great vehicle to transfer wealth from one generation to the other in a way that’s intuitive to an adviser,” Mota said.
“In a lot of ways it operates like a managed fund with effectively a trust structure around it,” he said.
Mota believes there are essentially two groups of advisers — the older advisers who are typically aware of investment bonds, understanding their tax effectiveness “but probably haven’t used them in a while” and younger advisers “who may not have heard about investment bonds at all”.
While investment bonds may not be as tax effective as superannuation they do have their advantages, particularly in estate planning, he said.
Upon the death of an investment bond-holder, there are no taxes payable when the bond is transferred from one generation to another while there are no probate issues, Mota said.
Recommended for you
Results are out for the latest sitting of the ASIC financial advice exam, with the pass rate falling for the second consecutive sitting.
Adviser losses for the end of June have come in 143 per cent higher than the same period last year, and bring the total June loss to over 350.
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
