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Estate planning: more than just a will. We all want the best for our loved ones. Throughout our lives we care for them, support them, and in many cases, help them out financially. The last of kindness we provide might be to transfer wealth, and it’s not uncommon to want to pass on as much as possible. That’s where estate financial planning comes in.

Importance of estate planning


Estate planning is all about ensuring the people you love are looked after once you’ve passed away. One of the most vital aspects of this is to accumulate funds to pass on. Another is to facilitate a smooth transfer to the people you want to benefit.

With smart estate financial planning incorporating tax-effective investment strategies such as Education Bonds, it’s possible to cover off all the considerations.

Benefits of estate planning


Estate financial planning can cover many areas, from tax-effective saving to rock solid wealth transfer instructions. The overarching benefit of estate planning is simple: being able to transfer as much wealth as possible, smoothly, and effectively.

It can help to look at the idea in the context of a tax-effective investment with estate planning-specific features, such as Education Bonds. When it comes to strategic estate planning examples, they’re a good place to start.

Using Education Bonds to pass on more wealth, more smoothly


Education Bonds have unique features that allow for both tax-effective saving and the smooth transition of wealth.

Funds can be withdrawn at any time for any purpose, meaning they can act as a means to help loved ones meet the cost of education, or life events such as a wedding or a house deposit. They also provide a level of comfort around what happens in the event of death.

What makes Education Bonds an attractive investment vehicle?


Education Bonds are tax-effective, largely due to investment earnings tax being paid on your behalf at a rate of 30% or lower. The Education Tax Benefit (an additional $30 for every $70 withdrawn from your investment earnings) applies when funds are accessed for education purposes.

Standard investment earnings are taxed at your marginal tax rate, which may be much higher than the 30% or lower tax rate paid on your behalf.

You control who benefits, in life and death


An Education Bond operates like an education-purposed ‘Family Trust’ that can be used to grow and share wealth with beneficial tax treatment.

When you take out an Education Bond, you can nominate the loved ones you want to benefit from it, and enjoy a high degree of control and flexibility. For example:

• As Bond Owner, Sophia might nominate two grandchildren as Education Beneficiaries .
• She can withdraw funds for them at any time, with full control of whether they’re used for education-related purposes or not.
• If other grandkids come along, they can be included too, as new Education Beneficiaries can be added or removed at any time.
• Sophia can also specify Bond Estate Nominees: people who will receive a specified split of the funds when the term of the Education Bond is up.
• She can transfer the Bond to someone else at any time, even a future activated transfer set for a particular date or event, without personal tax or Capital Gains Tax implications.

If the owner of the Education Bond passes away before it matures, beneficial estate planning factors come in to play.

Benefits specific to estate financial planning


With Education Bonds, you can control how your funds are allocated and distributed and take comfort in the knowledge your wishes will be carried out exactly as you specify in the event of your death.

• Because Education Bonds are investment-linked life insurance contracts, the two grandchildren nominated as Education Beneficiaries are also the Lives Insured.
• If Sophia were to pass away, the Bond would continue for her grandchildren.
• The Bond Owner can add a Bond Guardian to carry out future plans. For example, Sophia might nominate her daughter – the mother of the two grandkids.
• Because the Bond sits outside her estate, it can’t be challenged – the proceeds will go to Sophia’s grandchildren without fear of the decision being contested.

With flexible features, tax-effective benefits, and a high degree of certainty, it could pay to consider Education Bonds when creating your estate financial planning strategy.

We can help?


We’re here to help parents and grandparents help the ones they love. To learn more about how Futurity Education Bonds can fit into your estate financial planning strategy, speak with your financial adviser about the Futurity Education Bond range. Or get in touch with us.