Austock has released a solicitor free trust structure which allows investors to set up a low cost 'Bare’ holding trust at the same time an insurance bond is issued.
Holding investments within the Bonds Custodian Trust (BCT) issues investors an insurance bond in a private trust for $100, to manage income testing of their financial assets.
This works because trusts are assessed for income under social security legislation on 'taxable’ income and insurance bonds do not generate 'taxable’ income.
Previous to the BCT, this strategy required advisers to employ the services of a solicitor which incurred added costs for the client and introduced a third party into the client relationship.
Additionally, the BCT has no tax file number, nor does it incur stamp duty or ongoing costs and, gives the client total control over the bond to draw lumps sums or annuity streams if they wish, Austock said.
Austock head of IFA product and relationships Richard Atkinson said the BCT could be employed in residential aged care and home care income testing reduction strategies and for estate planning purposes.
Atkinson pointed out that the estate planning outcomes of this structure, unlike some alternative structures in the market, are very flexible to client needs and importantly all proceeds in an estate planning wind up are tax free directly to nominated beneficiaries or the estate.
