Forman Financial Services

Aged Care Strategy – Investment – Insurance bond in a trust

This can benefit people who:

  • are impacted by the income test for social security purposes
  • have sufficient funds to invest in an insurance bond in a trust

Potential Benefits:

  • Where a person is attributed with a private trust, for both social security and aged care means testing:
  • Net assets of the trust are assessable assets
  • Net profits of the trust are assessable income
  • Where the private trust holds an insurance bond, net profits of the trust are nil as the bond does not distribute income. This results in nil assessable income
  • As an insurance bond in a trust has nil assessable income (unless withdrawals are made within the first 10 years) it may result in increased social security entitlements (for income tested people) and reduced aged care means tested fees (for people impacted by assessable income)

Things to be aware of:

  • Need to consider the set up costs (e.g. accounting or legal fees) that may be involved in setting up a trust
  • Insurance bonds are internally taxed at 30%
  • Insurance bonds do not provide cashflow unless withdrawals are made
  • Most people with sufficient assets available to invest in this strategy are asset tested (not income tested) for social security purposes

Aged Care & Home Care can seem complex.  We have a special offer for general advice for $225.00.
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