Do You Have an Estate Directory?

Ok, so you've planned for retirement, you have insurances in place, your Wills are up to date, and you've appointed Enduring Powers of Attorney. You couldn't be more organised - well done!

But do your loved ones know where your Will is located? How about your insurance and superannuation documents? Do they know who your Lawyer, Financial Advisor and Accountant's are? How about that key to the safe or special filing cabinet?

You can see where I'm going with this.

An 'Estate Directory' is a simple but extremely useful document to have in times of crisis. Basically, it's a list of important contacts and the location of documents that you can give to your next of kin, leave in an obvious place, or lodge with us, your Financial Advisor.

Don't let your well considered plans unravel at the worst possible time. If you're a client of Westmount, ask for an Estate Directory today (it's free).

Rick Maggi

Insurance Bonds. Really?

Looking for a legal tax haven? There's no need to look offshore - how about one you can get in Australia that's taxed internally at 30 per cent, doesn't need to appear on your annual tax return and if you hold it for 10 years you can withdraw it without paying any tax?

Welcome to the not so new alternative to superannuation - insurance bonds.

As the dust settles from the Federal Budget earlier this month, insurance bonds have suddenly been getting a lot of love from advisers and investors, and for good reason. With the Federal Government effectively deciding that the wealthy can look after themselves, superannuation has been reduced from a five star to a four star investment, still incredibly tax effective and worth the effort, just not quite what it used to be, particularly for those with large superannuation balances. Enter insurance bonds.

What is an insurance bond? Just to refresh your memory, they are a tax-paid investment, with the bond fund paying up to 30 per cent tax on your behalf. All money invested in them comes from after-tax dollars, but there is no limit on the amount you can invest and your money is accessible at anytime.

Because the earnings accrue within the fund there is no assessable income to declare on your tax return each year, and if you hold them for 10 years or more all proceeds can be redeemed tax-free. This makes them ideal for people who want to reduce income for purposes such as maximising the family tax payment, or becoming eligible for the Commonwealth Seniors Health Card.

And if the bond is redeemed earlier than 10 years, the proceeds are taxable as normal income, but the holder is entitled to a rebate of 30 per cent, which effectively makes the bonds almost tax-free for most investors at any stage. For example there tax on $10,000 profit will be $3,250 but the rebate will be $3,000, so the holder will have just $200 tax to pay.

They also offer significant capital gains tax advantages. They can be transferred from one investor to another at any time without capital gains tax, and within the bond you can switch between a range of investment options (like Australian and international shares) without triggering capital gains tax whenever you feel it is appropriate.

Insurance bonds also handy for older investors who can no longer contribute to super, and investing for kids and grandkids.

Assuming the latest round of Budget proposals are passed, expect to hear more about insurance bonds in the coming year.

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.